Understanding Hedge Fund Fees: Implications for Hedge Fund Managers
K&L GATES
MONTHLY SERIES-SAMPLE DISCLOSURE
While the Advisor believes that the series-consolidation system is a
relatively simple procedure and is fair to all parties, there are several
disadvantages associated with this method of accounting. First, the series
of shares and consolidation method can be quite cumbersome, because
many funds pay incentive fees only once a year and this means that, if a
fund is a heavily traded, expanding fund, then by the end of the year it could
have 12 (for monthly periods) separate series in issue. If a fund is having a
losing year, then it is possible that up to 24 (for monthly periods) series
would be issued, before the next accounting period is finished.
The other obvious disadvantage of the series-consolidation method is that it
is not possible to publish a single net asset value per share or unit,
because each series (or sub-series, where applicable) had its own net asset
value. There is no real problem in publishing several different net asset
values, but it could be confusing to some Unitholders, particularly if they
make several investments into the fund over a period of time and so end up
with holdings that have different net asset values.
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