2020/2021 Hedge Fund Side Letter Study

December 15, 2021

Seward & Kissel is pleased to release its 2020/2021 Hedge Fund Side Letter Study. The key takeaways of the Study include:

  • Accounting for 54% of all side letters, funds of funds reached their highest level since 2017/2018. Other investor types, in descending order of prevalence, were endowments, government plans, high-net-worth individuals/family offices, corporate pension plans, and non-profit institutions.
  • Most-favored-nation clauses retained their popularity, appearing in 43% of all side letters, virtually identical to their 44% total in 2019/2020.
  • Fee discount clauses also appeared in 43% of all side letters and remained consistent in popularity over the previous two studies, following a sharp rise from 24% in the 2017/2018 study. Fee discount clauses were much more common in side letters with new managers (67%) than mature managers (29%).
  • Mature managers executed 79% of side letters analyzed. The average RAUM of newer managers was about $152 million.

To download a copy of the Study, please complete and submit the form below.

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