Why hedge fund illiquidity is good for you

The planned ballot next month of shareholders in HSBC's listed hedge fund, on moving into its open-ended Ucits AdvantEdge vehicle, has a greater resonance beyond the vote itself.

Announced last week, the ballot is on the £78m Global Absolute, one of the oldest listed alternative funds. If over 75% of voters opt to transfer to HSBC's €64.3m AdvantEdge Ucits fund of hedge funds, the move will come swiftly thereafter. Investors can also redeem now. It is not the first vote on a listed portfolio's future. Nine others, run by six managers have faced or will face continuation votes this year. Most were triggered after the average discount to NAVs ballooned to almost 30% at the sharp end of the crisis. Back then, many funds stopped hedging sterling share classe...