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Hybrid funds

Hybrid funds provide flexibility in a competitive investor landscape. By combining the liquidity of listed instruments with the potential returns of alternative investments you can meet your investor and investment needs across multiple asset classes through a single fund.

Whatever your investment approach, hybrid fund offerings bring with them a level of complexity when it comes to administration. Different structures and investment behaviours, complex fee, payment and returns calculations, plus investments across multiple asset classes mean each hybrid fund is unique, and that you need the support of an administrator with the expertise to tailor a solution to your specific needs.

That’s where IQ-EQ comes in. Our highly experienced team understands the challenges you face, and can guide you smoothly through the process of setting up and administering a hybrid fund. In addition to our unrivalled expertise, we offer an integrated technology platform based on our dedicated software and close partnerships with leading third-party providers.

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Hybrid funds FAQs

What is a hybrid fund?

Hybrid funds combine illiquid investment strategies with the liquidity and hedging strategies of open-ended hedge funds, offering investors access to the returns of alternative investments combined with the liquidity of listed instruments, along with built-in diversification.

These funds can provide exposure to a wide variety of asset types, including publicly listed equity, real estate, infrastructure, derivatives, and illiquid investments such as distressed debt, private credit and CLOs. Depending on the structure and terms of a hybrid fund, they can also offer investors the opportunity to withdraw and add capital on an ongoing basis, at specified intervals.

Is it more complex to set up a hybrid fund?

The often complex or “non-standard” nature of hybrid funds poses challenges from an administration perspective with the need to combine data feeds from multiple systems and potentially providers, along with enhanced reporting and analytics.

If you need help with fund administration, contact our team of experts.

What are the different categories of hybrid funds?

Hybrid funds differ from traditional vehicles in that they can hold more than one type of asset; for example, a hedge fund manager may launch a hybrid fund to target high-yielding illiquid distressed debt alongside more traditional listed equities. This offers managers a much greater level of flexibility, and the ability to make investments in two or more asset classes from the same fund.

The different categories of hybrid funds are:

Evergreen funds: In an evergreen fund, returns from realisations are recycled back into the fund to finance new investments rather than distributed to LPs.

Open-ended/semi open-ended: Open-ended hybrid funds also have no close date, but distribute the capital returned after realising investments to investors. Semi open-ended funds sit between open- and closed-ended funds, in that they may have a closing date, but also extension periods, and the ability to re-invest and to admit new investors under certain conditions.

Working with IQ-EQ has been seamless – you and your team understand our business, advise us appropriately, and handle your side of our collective partnership so that we can focus on making good investment decisions. Evan Gibson SVP, Merchants Capital

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