What is Side Pocket?
Side Pocket A separate account or sub-fund used by investment funds, especially hedge funds, to isolate illiquid or hard-to-value assets from the main portfolio, ensuring fair allocation of profits and losses among investors.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Side Pocket” Used in Practice?
The fund created a side pocket to separate the illiquid distressed debt from the main investment pool to protect ongoing investors.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Side Pocket?
A separate account or sub-fund used by investment funds, especially hedge funds, to isolate illiquid or hard-to-value assets from the main portfolio, ensuring fair allocation of profits and losses among investors.
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