Harvard fails to unload hedge funds

Parents Forum
1

<p>No sale.</p>

<p>[Bloomberg.com:</a> Worldwide](<a href=“Bloomberg Politics - Bloomberg”>Bloomberg Politics - Bloomberg)</p>

2

<p>Lots of that dreck on the market (learned a new word on another thread). If any endowment can stand pat and wait for a better price, it is Harvard’s.</p>

3

<p>Just a note on terminology: </p>

<p>“Hedge funds” are funds that primarily invest in tradable securities, although they may also buy derivatives, etc. They tend to be pretty liquid, and to permit holders to pull their money out from time to time. They are essentially unregulated open-end mutual funds, often with sophisticated and risky investment strategies. Some hedge funds have found themselves holding securities for which there is no effective market, and have limited or stopped redemptions, and some have been liquidating themselves. </p>

<p>“Private equity” funds (which cover a variety of sub-species) invest in securities for which there is no public market. They are extremely illiquid, and never permit optional redemptions. Instead, they return capital to investors as they sell their investments (although often they have the right to re-invest early returns) over a 10-year period. They also usually involve ongoing commitments to contribute capital for up to five years, since they never want to lower their return by holding more cash than they can invest within a few weeks, and these overhanging capital commitments are particularly problematic to institutions whose liquid holdings have declined in value and who do not want to have to throw good money after bad.</p>

<p>Anyway, Harvard failed to unload its private equity funds, not its hedge funds.</p>

4

<p>I don’t know what made me write HFs. It was PE. Got HFs on the brain.</p>

5

<p>Not only do Hedge Funds routinely take positions in Private Equity deals, but Hedge Funds have become internationally the largest lenders in non-public financing transactions. The traditional banks were thus side-stepped and sought to replace those revenues by other means. And we all know the consequence of that!</p>