It's no secret that hedge funds have struggled mightily with their redemptions policies. In the wake of the 2008 financial crisis, lots of limited partners rushed for the doors. That put fund executives in a tough position. They ended up holding up a lot of redemption requests, inflaming their investors. Soon after, investors successfully forced many to come up with friendlier redemption policies.

But the fallout continues, as the SEC continues to look at whether some funds denied redemptions to some but not to others. One answer may rest with the age-old notion of a closed-end fund. Bloomberg notes that Pershing Square Capital Management, known for its activist investing, will likely sell shares in a closed-end fund sometime in 2012. The firm itself will not go public.

"By selling shares in a listed fund, Ackman is trying to avoid a repeat of 2009, when investors redeemed about 27 percent of the firm's capital. The redemptions made it harder for him to take advantage of opportunities created by the global financial crisis," he told the news service.

Other hedge fund firms have already gone this route, including Brevan Howard Asset Management and Third Point. This sounds good in terms of redemptions. But having a closed-end up fund out there with pries updated daily could open the fund up to some embarrassment, as it will not strictly reflect the value of assets in the funds. If a particular proxy war looks hopeless for the fund, the price could drop well below the NAV. It seems kind of risky. 

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