Hedge funds founded greater numbers of side pockets in times of great uncertainty on the stock exchange. This entails the fund portfolio being split into two parts: one valuable, liquid part and one part which can only be valued to a very small extent, if at all, and which is practically illiquid (through the creation of share categories or sub-funds). When making returns, investors initially only receive the – properly valuable, liquid – part of the amount due to them. They receive the remainder in the form of a credit note securitizing a deferred payment undertaking. This can prevent a liquidity crisis, as the fund manager only has to sell assets which can be valued and traded at fair prices.
Term-Nr.: 791
German: Side Pockets (733)
Source: SFO D15 2010 m. e. E., 24.04.2010
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