Investors, Still Demanding Liquidity, Leave Returns on the Table

After getting burned in 2008, investors of all stripes have shifted their investments toward more liquid hedge fund strategies. But a new study suggests that they are sacrificing performance gains as a result.

Call it another case of “be careful of what you wish for.”

Liquidity has become a much bigger priority among hedge fund managers ever since the global market meltdown of 2008, when dozens of hedge funds — including many that ultimately did a good job of weathering the storm — erected restrictive barriers preventing many investors from pulling out their money all at once.

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