What to work on Fund’
The Fund represents a situation in which a hedge Fund or other pools of assets, faced with a growing number of applications for redemption of shares from investors. On the Fund can happen for several reasons, but usually the result of poor performance of underlying assets. This poor performance motivates investors to demand their money back.
Breaking down the ‘work Foundation’
Run for the Fund is gaining momentum, as Fund managers will be forced to sell assets to meet redemption requests. These forced sales are often negatively impact the performance of the Fund, especially during a bear market. As the market falls, the Fund managers must sell assets to raise the necessary funds, and often have to sell at a loss. And buybacks will further reduce the yield of the Fund, investors become frightened and repayment on demand, causing a negative feedback loop that, in many cases, may force the Fund to close.
Many hedge funds to protect themselves from the road, allowing the leaders to suspend the ability of investors to redeem during the period. Before the financial crisis of 2008, such charms were extremely rare because they signal to investors that the Fund is struggling and may even be forced to close. But during the crisis, many large, well-known hedge funds, as hedge Fund pioneer global Fund of Paul Tudor Jones ‘ BVI has suspended repayment to prevent operation of the Fund.
An example of the work of the Fund
Peloton partners happened classic to manage its mortgage-backed $ 1.8 billion hedge Fund in 2008, after the crash in US property prices badly damaged the development indicators. The peloton bets against mortgage of real estate and invested heavily in higher level of mortgage loans that allowed her to earn 87 percent of the profits. But as the crash continues, an even higher level of development investments began to sour. The firm has suspended repayment to prevent investors fleeing EN masse, but these measures were too little, too late. The group announced in February 2008 that it is closing its mortgage Fund and return all the money left for investors.
The Fund is not restricted to hedge funds. In 2008, a prominent money market mutual Fund called Reserve primary Fund suffered a run as a result of its investments in short-term debt of the bankrupt investment Bank Lehman brothers. Although the Fund has retained only part of its investment in Lehman debt, scared investors withdrew nearly two-thirds of the Fund’s total assets under management within a few days after the crash. Although the Fund has suspended redemption it wasn’t enough to prevent its ultimate failure.