Credit Hedge Fund Halts Redemptions, Cites Tough Markets

Editorial Staff

2 April 2020

Hedge fund has told clients that it is suspending redemptions from one of its funds for the foreseeable future because it did not want to be a forced seller amid difficult market conditions, according to the Wall Street Journal earlier this week.

The $7 billion EJF, founded by Emanuel Friedman, told clients in a letter last Friday that it was halting any withdrawals from its Debt Opportunities Fund. That fund managed $2.5 billion at the end of February, the publication said. While the fund received redemption requests totaling only 6 per cent of its assets under management for March 31, the letter said that it wanted to “protect all of the Fund’s investors by not selling assets into a nonfunctioning market.”

The “gating” of redemptions is an example of how investment managers around the world have had to consider such actions amid turbulent markets. In the UK, for example, a number of open-ended real estate funds have halted redemptions, raising questions about liquidity/risk mismatches for certain asset classes.

The report said that the fund will review the suspension on a quarterly basis.

Family Wealth Report has contacted EJF about the report to confirm. It may update this story in due course.