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TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-30 22:31
Do you mean a UCITS that any retail investor can buy from an online broker can have a 1-month cash-withdrawal redemption time? i.e. close positions today and you get your money back in 1 month from today?

e.g. I can keep the investor money for 1 month and close/wind down the trades at the right time (=when my model says so), and then return the money to the investor.

Did I get this right?

(I did not know this was possible with a UCITS).



HitmanH


Total Posts: 497
Joined: Apr 2005
 
Posted: 2020-07-01 13:24
You MUST offer liquidity twice a month in a UCITS - and most common is weekly (daily for some strategies / providers).
From when they put it in - the denominator changes - so if near leverage limits etc that may be a problem - so technically takes affect then.
Operationally - once received - you have 10 business days to return the funds

ronin


Total Posts: 585
Joined: May 2006
 
Posted: 2020-07-01 20:11
I have no idea what UCITS rules are - I was talking about hedge funds.

But this:

> e.g. I can keep the investor money for 1 month and close/wind down the trades at the right time (=when my model says so), and then return the money to the investor.

sounds like a really, really bad idea. Just no.

You use the time to trade out in a way that minimizes the harm to the redeeming client and your other clients. You don't use it to hunt for a few basis points in alpha for the redeeming client. Market timing issues are on the client, not you.

"Dear client,

Thank you for your redemption request.

I was doing my best to get you a few extra basis points on your redemption. But then, unfortunately, something unexpected happened.

It's a really funny story, actually."



Seriously, no.

"There is a SIX am?" -- Arthur

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-07-02 07:41
I think I did not explain myself clearly:

assume I trade a strategy that uses options with an expiry, for example, 1-week expiry options.

At the end of the week, on Friday, the trade is over, and liquidity is available for redemption, whereas during the life of the option, let's say on Wednesday, if I close the trade abruptly because the client wants his money back, I may have to suffer a loss.

That is what I meant when I said "close/wind down the trades at the right time (=when my model says so)", i.e. my model may say "close the trade at option expiry, once a week".

Anyway, I think you guys answered my questions: UCITS do not have the flexibility of hedge funds when it comes to redemptions and that is a big issue.

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