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Purpose

Seeks to introduce several of the important issues that must be resolved in connection with the structuring and formation of a customized hedge fund program

Design/methodology/approach

Explains why some institutional investors have sought alternative investment structures that provide for the establishment of dedicated, captive hedge fund programs and provides an introduction to several of the important issues that must be resolved in connection with such a program, including the choice of investment vehicle, Investment Company Act considerations, ERISA considerations, tax considerations, Investment Advisers Act issues, terms of the captive fund's governing document, investment guidelines, and performance‐monitoring processes.

Findings

At a time when hedge fund assets are growing exponentially, some institutional investors have turned to dedicated, captive hedge fund programs to ensure their access to talented hedge fund managers and secure a diversified investment approach.

Originality/value

Two attorneys who work with hedge funds provide important guidance on structuring and satisfying the regulatory requirements for dedicated, captive hedge fund programs.

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