The Liquidity Paradox
Open-ended funds promise flexibility for GPs and liquidity for investors. But with perpetual capital comes perpetual complexity, particularly around FX hedging and liquidity.
Drawing on proprietary data from Validus and produced in collaboration with Private Equity Wire (PEW), this report demonstrates how hedging behavior differs meaningfully across asset classes and reveals a paradox: the short-dated hedging programs open-ended funds use to manage redemption risk create their own liquidity demands.
Gain a deeper understanding of PE hedging strategies and instrument choices.
Learn to identify and mitigate liquidity risks specific to open-ended funds.
Discover the importance of robust liquidity management frameworks.
“Ultimately, effective hedging for open-ended funds is complex – requiring a keen focus on liquidity management. Success depends on proactively aligning hedge design, buffer sizing and monitoring frameworks from inception, rather than responding reactively when settlement stress occurs.”
Nirvani Sookdeo, Global Head of Risk Advisory at Validus