It can be tricky to divide hedge funds in a divorce.
Generally, hedge funds are similar to mutual funds. However, they are not regulated by the SEC, but do require a special status by the investors, which means that the investors must normally have an annual net worth of over a million dollars.
When attempting to divide hedge funds as part of a divorce, it’s important to know that each hedge fund is different, and some may have certain periods during which funds cannot be redeemed or sold.
Sometimes that period can last for over a year. Others are open-ended, which means the funds can be withdrawn throughout the year.
The structure of the hedge fund can affect the timing of the withdrawal.
Hedge funds can also be very difficult to value.
They may be a mix of closely-held securities and publicly traded securities.
Some of the closely-held securities may be very difficult to value, especially if they haven’t been traded recently.
Some hedge funds may require a special valuation by an expert.
Finally, it’s important when looking at hedge funds that they aren’t confused with private equity investments.
They may look similar, but they are very different types of investments. They can be valued differently, and the accounting for each is done differently.