SAIL Seeks 'Liquidity Premium' From Illiquid Hedge Funds

Oct 12 2010 | 1:09pm ET

Fund of hedge funds firm SAIL Advisors plans to invest more of its assets in less liquid hedge fund strategies, and may dip its toes into the hedge fund secondary market.

The Hong Kong-based firm said it will consider hedge funds with lockups of up to two years for its US$1.2 billion Flagship Fund, Bloomberg News reports. The firm is also looking at the secondary market, hoping to snap up attractive investments at a sizeable discount.

"There are some assets, some opportunities out there that are just very attractive, but people don't have the appetite to go after that," CEO Vincent Duhamel told Bloomberg. "We have capital that is very long term. We can earn a liquidity premium because we're willing to commit longer term."

As for stakes available on the secondary market, Duhamel pointed to funds with redemption restrictions and side-pockets.

"Sometimes there are some pretty good assets behind that," he said. "It's just a question that it's going to take more time before you can achieve higher returns."

SAIL's move towards less-liquid funds comes as it seeks to differentiate its Flagship from the US$557 million Topaz Fund it took over from ING Groep earlier this year. Topaz features monthly liquidity, as opposed to quarterly for Flagship, making it harder for the former to invest in illiquid funds.


In Depth

Dillon Eustace: The Advantages of ICAVs

Feb 11 2016 | 7:51pm ET

As the growth of alternative investment vehicles continues, global asset managers...

Lifestyle

Citadel's Ken Griffin Donates $40M To New York's Museum of Modern Art

Dec 22 2015 | 9:23pm ET

Citadel founder Ken Griffin has donated $40 million to New York’s Museum of Modern...

Guest Contributor

Hedging Against Reputational Risk in the 21st Century

Feb 12 2016 | 7:18pm ET

For investors, the first step in researching a new fund or manager is to google...