Hedge Fund Gemini Pushes Fund Split Over Side Pockets

May 5 2010 | 10:13am ET

With side-pockets getting some unwanted regulatory attention, one hedge fund says it has struck upon a better way of dealing with illiquid investments.

Gemini Strategies in 2008 split its flagship fund into a continuing fund and a redeeming fund, firm chief Steven Winters tells PIPEwire. Winters said that the “simple and fair” solution has allowed him to return some 80% of the assets in the winding-down fund to redeeming investors—earning them an 18% return in the process—while managing the continuing fund to a 26% return last year.

“We made no new investments for the redeeming investors and have been pushing cash to them as quickly as possible,” he said. “This segregation allowed us to meet the competing interests of both types of investors: redeeming and non-redeeming.”

Winters said he expects to get redeeming investors the rest of their money back by the end of the year.


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