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Investors Look to Hedge-Fund Playbook to Deal With Russian Assets

  • Fund group presses for allowing the use of side-pocketing
  • Regulators have been largely dismissive of the market tactic
Vladimir Putin

Vladimir Putin

Photographer: Andrey Gorshkov/AFP/Getty Imags

As fund managers everywhere look for ways to dispose of their Russian assets, Europe’s main investor hub says it’s now appealing to regulators to let the industry use a controversial model favored by hedge funds to shield portfolios from crippling losses.

Side-pocketing, whereby a firm creates a separate vehicle to hold assets that are too risky and illiquid to handle, may be the most obvious solution to the market freeze that’s followed Russia’s invasion of Ukraine, according to the Association of the Luxembourg Fund Industry, whose members manage a combined $6.5 trillion in assets.