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Following US$700 million (A$895 million) in redemption requests in the final quarter of 2008, US hedge fund Blue Mountain introduced a new fee structure and an optional bidding sys­tem for investors in an attempt to create a nexus between liquidity and hedge fund fees. In October last year, hedge fund-of-funds investing in the multi-strategy credit fund asked for hundreds of millions of invested capital back, an event which threatened the positions of remaining investors and forced Blue Mountain to carve out part of its port­folio and create a redeeming share class to pay the requests. “The liquidating share class bore its own costs for liquidity,” Jay Bryant, managing director of the hedge fund, said.

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Following US$700 million (A$895 million) in redemption requests in the final quarter of 2008, US hedge fund Blue Mountain introduced a new fee structure and an optional bidding sys­tem for investors in an attempt to create a nexus between liquidity and hedge fund fees. In October last year, hedge fund-of-funds investing in the multi-strategy credit fund asked for hundreds of millions of invested capital back, an event which threatened the positions of remaining investors and forced Blue Mountain to carve out part of its port­folio and create a redeeming share class to pay the requests. “The liquidating share class bore its own costs for liquidity,” Jay Bryant, managing director of the hedge fund, said.

Read more