<p>Actual securitization would be impractical for a number of reasons, but secondary market transactions of shares in hedge funds <a href="https://thehedgefundjournal.com/trading-hedge-fund-shares/" rel="nofollow noreferrer">do occur</a> with the consent of the funds in question (though it’s not a particularly liquid market). Using these shares as collateral would not generally be practical, as they’re not assignable interests. </p>

CC BY-SA 4.0
2020-06-16T03:39:26.117Z
According to the linked article, secondary limited partner trading "...has now become a widely accepted practice..." in the HF community, implying that it is somewhat liquid(?).
Michael
CC BY-SA 4.0
2020-06-16T11:35:24.887Z
@Michael The context there is that it’s “widely accepted” in the sense that it’s not considered as much of a black mark on the HF manager to have a client drop them in this manner. If you read a bit further into the article, you’ll note several references to it being illiquid. This is a market that involves essentially bespoke matching between buyers and sellers— a transaction that takes only weeks is basically a best-case scenario.
dismalscience
CC BY-SA 4.0
2020-06-16T03:09:55.710Z
2020-06-16T03:09:55.710Z
dismalscience
<p>Let's say that I'm an investor in a hedge fund, a recession just hit and I need cash asap. But the hedge fund either has infrequent redemption, or it locks my fund in, until the market gets better and they can liquidate the assets at a better price.</p>

<p>If I need money, can I securitize my position at the fund? So i can either sell that as an asset at a discount or use it as a collateral.</p>

CC BY-SA 4.0
2020-06-16T00:00:28.983Z
“Securitise” means that you are issuing a creating an entity with assets that then sells securities in the public markets. It seems extremely unlikely that this would be possible, and such a security would be of little interest to investors. Whether hedge fund holdings can be used as collateral or transferred is a question securities law.
Brian Romanchuk
<investment><asset-pricing><securities>
Can a position at a hedge fund be securitized?
curiousTrader
# Can a position at a hedge fund be securitized?

(Asked by: username_0 on 2020-06-15)

Let's say that I'm an investor in a hedge fund, a recession just hit and I need cash asap. But the hedge fund either has infrequent redemption, or it locks my fund in, until the market gets better and they can liquidate the assets at a better price.

If I need money, can I securitize my position at the fund? So i can either sell that as an asset at a discount or use it as a collateral.

**Tags:** investment, asset-pricing, securities

> **Comments:**
> **username_1**: “Securitise” means that you are issuing a creating an entity with assets that then sells securities in the public markets. It seems extremely unlikely that this would be possible, and such a security would be of little interest to investors. Whether hedge fund holdings can be used as collateral or transferred is a question securities law.  

---

## 1 answers

### Answer by username_2 on 2020-06-16. Score: 2

Actual securitization would be impractical for a number of reasons, but secondary market transactions of shares in hedge funds [do occur](https://thehedgefundjournal.com/trading-hedge-fund-shares/) with the consent of the funds in question (though it’s not a particularly liquid market). Using these shares as collateral would not generally be practical, as they’re not assignable interests.

> **Comments:**
> **username_3**: According to the linked article, secondary limited partner trading "...has now become a widely accepted practice..." in the HF community, implying that it is somewhat liquid(?).  
> **username_2**: @username_3 The context there is that it’s “widely accepted” in the sense that it’s not considered as much of a black mark on the HF manager to have a client drop them in this manner. If you read a bit further into the article, you’ll note several references to it being illiquid. This is a market that involves essentially bespoke matching between buyers and sellers— a transaction that takes only weeks is basically a best-case scenario.  

---

