Fund Structure: Unpacking Fund Structure: A Comprehensive Guide for Hedge Fund Interviews

1. Introduction to Hedge Funds and Their Structures

Hedge funds are a unique and dynamic segment of the investment world, often characterized by their flexible investment strategies and their aim to achieve high returns. These private investment vehicles are structured to pool capital from accredited individuals or institutional investors to invest in a variety of assets, often with complex strategies that include leverage, short-selling, and derivatives. Unlike mutual funds, which are typically subject to a more stringent regulatory framework, hedge funds enjoy greater latitude in their operations, allowing them to pursue aggressive strategies in both rising and falling markets.

The structure of hedge funds is meticulously designed to align the interests of the fund managers and investors, while also providing a framework for risk management. Typically, a hedge fund is set up as a limited partnership (LP) or limited liability company (LLC), with the fund manager acting as the general partner or managing member, respectively. This setup provides a legal shield for investors, limiting their liability to the amount of their investment.

From the perspective of an investor, hedge funds are attractive for several reasons. They promise the potential for higher returns, thanks to their ability to engage in a wider array of investment strategies. Moreover, they offer diversification benefits, as their returns are often uncorrelated with traditional asset classes like stocks and bonds. However, this comes with a trade-off in terms of liquidity, as hedge funds typically require investors to lock in their capital for a certain period, known as the lock-up period.

1. Investment Strategies: Hedge funds employ a vast range of strategies, each with its own risk and return profile. Some common strategies include long/short equity, market neutral, global macro, event-driven, and relative value arbitrage. For example, a long/short equity fund might buy undervalued stocks while shorting overvalued ones, aiming to profit from both rising and falling market segments.

2. fee structure: The fee structure of hedge funds is another distinctive feature, often encapsulated in the "2 and 20" model. This refers to a management fee of 2% of the total asset value and a performance fee of 20% of the fund's profits. This incentivizes fund managers to perform well, although it has been a point of contention among investors who argue that it can encourage excessive risk-taking.

3. Regulation and Transparency: Hedge funds are subject to less regulatory oversight than other investment vehicles, which means they are not required to disclose as much information publicly. This lack of transparency can be a double-edged sword, providing privacy for investors but also making it more challenging to assess the fund's risk profile.

4. risk management: Effective risk management is crucial for hedge funds, given their use of leverage and complex strategies. Many funds employ sophisticated risk management systems to monitor and mitigate risks, such as Value at Risk (VaR) models. For instance, a fund might set a VaR limit to ensure that the potential loss from one day's trading does not exceed a certain percentage of the fund's capital.

5. Examples of hedge Fund structures: A notable example of a hedge fund structure is the master-feeder arrangement, where a master fund collects investments from various feeder funds, which could be based in different jurisdictions. This allows for efficient capital management and tax optimization for international investors.

Hedge funds are a compelling option for qualified investors seeking to diversify their portfolios and potentially enhance returns. Their structures are carefully crafted to balance the pursuit of aggressive investment strategies with the need for investor protection and risk management. As with any investment, due diligence is paramount, and understanding the intricacies of hedge fund structures is a critical component of evaluating their suitability for an investor's portfolio.

2. An Overview

Hedge funds, known for their exclusive investment strategies and high returns, are complex structures that involve various legal entities, each serving a unique purpose within the fund's overall architecture. These entities are meticulously designed to optimize the fund's operations, manage risks, and comply with regulatory requirements across different jurisdictions. Understanding the interplay between these entities is crucial for anyone looking to delve into the hedge fund industry, whether as an investor, a fund manager, or a service provider.

1. General Partner (GP): At the core of a hedge fund's structure is the General Partner, responsible for managing the fund's investments and operations. The GP is typically a limited liability company (LLC) or limited partnership (LP), ensuring that the personal assets of the fund managers are protected from the fund's liabilities.

2. Limited Partners (LPs): Investors in the fund are known as Limited Partners. They provide the capital but have limited liability, meaning their risk is capped at their investment in the fund. LPs can include individuals, institutions, or even other funds.

3. master-Feeder structure: To accommodate investors from different regions with varying tax implications, hedge funds often employ a master-feeder structure. This involves a master fund where all trading occurs, and several feeder funds that aggregate capital from investors and channel it into the master fund.

- Example: An offshore feeder fund might be set up in a tax haven like the Cayman Islands to attract foreign investors, while a domestic feeder fund caters to U.S. Investors.

4. Prime Brokerage: Hedge funds rely on prime brokers for services like securities lending, trade execution, and leverage. The prime broker is a critical entity that facilitates the fund's trading activities, often underpinning the fund's ability to implement complex strategies.

5. Administrator: An independent fund administrator is appointed to calculate the fund's net asset value (NAV), process subscriptions and redemptions, and often provide additional services like financial reporting and compliance support.

6. Custodian: The custodian holds the fund's assets for safekeeping and ensures that the investment portfolio is managed according to the fund's guidelines and regulatory standards.

7. special Purpose vehicles (SPVs): Hedge funds may create SPVs for specific investments, such as private equity stakes or real estate. These entities isolate financial risk and can offer tax advantages.

8. Management Company: Separate from the GP, a management company may be established to employ staff, lease office space, and handle non-investment functions. This entity charges the fund a management fee.

9. Auditor: An external auditor assesses the fund's financial statements, providing investors with assurance that the fund's reported financial position is accurate and reliable.

By dissecting the roles and responsibilities of these entities, one gains a clearer picture of the hedge fund's operational framework. For instance, the separation between the GP and the management company can mitigate conflicts of interest and enhance governance. Similarly, the use of SPVs can shield the main fund from certain risks and streamline investment processes.

In practice, the configuration of these entities can vary widely among hedge funds, influenced by factors such as the fund's size, strategy, and investor base. For example, a fund that focuses on algorithmic trading might prioritize a robust relationship with a technologically advanced prime broker, while a fund investing in illiquid assets might place more emphasis on its relationship with a reliable custodian.

The legal entities within a hedge fund are not just administrative formalities; they are strategic tools that, when structured effectively, can significantly impact the fund's performance and appeal to investors. As such, a deep understanding of these entities is indispensable for anyone aiming to navigate the hedge fund landscape successfully.

3. The Role of the General Partner (GP) and Limited Partners (LPs)

In the intricate dance of hedge fund operations, the General Partner (GP) and Limited Partners (LPs) play pivotal roles, each with distinct responsibilities, powers, and interests. The GP, often a hedge fund manager or management company, is the maestro, conducting the fund's day-to-day symphony, making investment decisions, and steering the fund toward its financial objectives. They are the active participants, the risk-takers, and the visionaries who leverage their expertise to maximize returns. In contrast, the LPs are the audience, the investors who provide the capital necessary for the fund's performance. They entrust their assets to the GP, relying on the GP's acumen to grow their investments while limiting their own liability and involvement in the fund's operations.

1. decision-Making authority: The GP holds the reins when it comes to decision-making. They decide which assets to buy or sell and when to do so. For example, if a GP sees an opportunity in emerging markets, they have the authority to allocate funds accordingly without needing consent from the LPs.

2. Liability and Risk Exposure: GPs have unlimited liability, meaning their personal assets could be at risk if the fund fails. LPs, however, enjoy limited liability, protecting their personal wealth beyond their investment in the fund. This structure encourages GPs to perform due diligence, as seen in the case of the long-Term capital Management (LTCM) collapse, where the GP faced significant financial repercussions.

3. Profit Sharing and Fees: Typically, GPs receive a management fee and a performance fee (often referred to as "two and twenty" – a 2% management fee and a 20% performance fee). LPs benefit from the fund's profits after fees. For instance, if a fund earns a 25% return, the GP would take their 20% cut of the profits, leaving the LPs with the remainder.

4. Fundraising and Capital Commitments: GPs are responsible for raising capital for the fund. They pitch the fund's strategy to potential LPs, who then commit capital. An example of this is the successful fundraising by Blackstone, which raised billions by convincing LPs of their strategic edge.

5. regulatory Compliance and reporting: GPs must navigate the complex regulatory environment, ensuring compliance with laws such as the dodd-Frank act. They also provide regular reports to LPs, detailing the fund's performance and holdings.

6. Investor Relations: GPs manage relationships with LPs, addressing concerns and providing transparency. A GP's ability to maintain strong communication can be crucial, as seen when investor confidence wavers during market volatility.

7. Fund Lifecycle Management: From inception to liquidation, the GP oversees the fund's lifecycle. This includes not only the active investment period but also the winding down of the fund, distributing assets back to LPs at the end of the fund's term.

Through these roles, the GP and LPs form a partnership where each party's success is intertwined with the other's. The GP's expertise and active management paired with the LPs' capital create a symbiotic relationship aiming for mutual financial gain. This dynamic is the cornerstone of the hedge fund industry, driving innovation and performance in the pursuit of superior returns.

4. Management Fees and Performance Fees

In the intricate world of hedge funds, fee structures play a pivotal role in aligning the interests of fund managers and investors. Traditionally, hedge funds have adhered to the "2 and 20" fee model, which includes both management fees and performance fees. Management fees are calculated as a percentage of the assets under management (AUM) and are typically around 2%. These fees cover operational costs, salaries, and other overheads. Performance fees, often set at 20%, are the fund managers' share of the profits, incentivizing them to generate positive returns.

From an investor's perspective, these fees can significantly impact returns. For instance, in a year where a fund achieves a 10% return on a $1 million investment, a 2% management fee would equate to $20,000, and a 20% performance fee on the $100,000 profit would be $20,000, totaling $40,000 in fees. This structure is under scrutiny, with some arguing it rewards managers regardless of performance, while others contend it ensures top talent is attracted to the industry.

Let's delve deeper into these fee components:

1. Management Fees:

- Fixed vs. Variable: While traditionally fixed, some funds are now offering variable management fees based on AUM tiers or performance benchmarks.

- Impact on Smaller Funds: Smaller funds may charge higher management fees to sustain operations, potentially deterring investors.

- Example: A fund with $500 million in AUM charging a 1.5% management fee would generate $7.5 million annually to cover expenses.

2. Performance Fees:

- high-Water mark Principle: This ensures that performance fees are only paid on new profits, protecting investors from paying fees on previously recouped losses.

- Hurdle Rates: Some funds set a minimum performance threshold before performance fees are charged, aligning interests with investors.

- Example: If a fund surpasses its high-water mark by $10 million, with a 20% performance fee, the manager would earn $2 million.

3. fee Structures and fund Strategy:

- Strategy-Specific Fees: Certain strategies, like quantitative or high-frequency trading, may justify different fee models due to their cost structures.

- Negotiation Flexibility: Institutional investors may negotiate lower fees, reflecting their significant capital contribution and bargaining power.

4. Emerging Trends:

- 1 or 30 Model: Some funds are adopting a model where investors pay either a 1% management fee or a 30% performance fee, whichever is higher, promoting performance-based compensation.

- Fee Caps: To attract investors, some funds implement caps on total fees, ensuring that management doesn't excessively profit during high-return periods.

While management and performance fees are foundational to hedge fund compensation, the landscape is evolving. Investors are increasingly seeking structures that ensure fees are commensurate with performance, prompting funds to innovate and adapt. As the industry continues to mature, we may witness further shifts in this dynamic, with a potential move towards more performance-aligned fee models.

5. Understanding the Different Types of Hedge Fund Strategies

Hedge funds are renowned for their diverse and complex investment strategies, which are designed to achieve positive returns regardless of the market's direction. These strategies range from the traditional to the highly innovative, each with its own risk profile, return potential, and market philosophy. Understanding these strategies is crucial for anyone looking to delve into the hedge fund industry, whether as an investor, a fund manager, or an analyst. The strategies employed by hedge funds are not just about picking stocks or assets; they are about making calculated decisions that balance risk and reward in the context of the broader market dynamics. They can be broadly categorized into several types, each with its own set of sub-strategies and techniques.

1. Long/Short Equity: This is one of the most fundamental hedge fund strategies. It involves taking long positions in undervalued stocks while shorting overvalued stocks. For example, a hedge fund might buy shares of a tech startup it believes is undervalued and short shares of an established tech company it believes is overvalued due to market hype.

2. Market Neutral: Funds employing this strategy aim to exploit price differences between related financial instruments. They seek to have zero net market exposure, meaning the fund's performance is not correlated with market movements. An example would be simultaneously buying and shorting pairs of competing companies in the same industry.

3. Event-Driven: These strategies seek to capitalize on stock mispricing that may occur before or after a corporate event, such as mergers, acquisitions, or bankruptcies. For instance, a fund might purchase the debt of a company that is about to emerge from bankruptcy, anticipating a rise in the company's equity value.

4. Global Macro: This strategy takes positions in global markets, including stocks, bonds, currencies, and commodities, based on macroeconomic trends. For example, if a fund anticipates that the U.S. Dollar will weaken, it might take a short position in the dollar while going long on emerging market currencies.

5. Quantitative: These funds rely on quantitative analysis to identify trading opportunities. They use algorithms and often trade at high frequencies. An example is a fund that uses machine learning to identify short-term trading patterns in the stock market.

6. Fixed-Income Arbitrage: This strategy attempts to exploit pricing differences in the fixed-income securities market, such as differences in interest rates or credit spreads. For example, a fund might exploit the spread between two government bonds from different countries.

7. Convertible Arbitrage: This involves taking a long position in a company's convertible securities (such as convertible bonds) and a short position in the company's common stock. The idea is to profit from the conversion premium of the bond if the stock price increases.

8. Distressed Securities: Funds focusing on distressed securities buy the debt of companies near or in bankruptcy. They may then play an active role in the restructuring process. For example, a fund might buy the bonds of a struggling retailer at a discount, hoping to profit during the company's turnaround.

9. Emerging Markets: These funds invest in securities from emerging markets, which can offer high returns but come with higher risk. An example would be investing in a portfolio of stocks from Southeast Asian markets, anticipating economic growth in the region.

10. Fund of Funds: This strategy involves investing in a collection of other hedge funds, thus diversifying risk. For example, a fund of funds might allocate capital across several event-driven and global macro funds.

Each of these strategies carries its own set of risks and rewards, and they are often combined to create a diversified portfolio. The key to success in hedge fund investing is not just in selecting the right strategy, but also in executing it effectively, managing risks, and adapting to changing market conditions. As the financial landscape evolves, so too do hedge fund strategies, with managers continually seeking innovative ways to generate alpha and deliver returns to their investors.

6. The Importance of the Funds Domicile and Tax Implications

When considering the structure of a fund, particularly in the context of hedge funds, the domicile of the fund is a pivotal factor that can have significant implications for both the fund managers and investors. The choice of jurisdiction is not merely a formality; it is a strategic decision that impacts the fund's operational, regulatory, and, most importantly, tax considerations. Different jurisdictions offer various incentives and regulatory frameworks that can be more or less advantageous depending on the fund's strategy, investor base, and long-term goals.

From a tax perspective, the domicile of the fund can influence the tax liabilities of the investors and the fund itself. Certain jurisdictions are considered tax havens, offering low or zero tax rates, which can be attractive for funds looking to maximize returns for investors. However, these benefits must be weighed against the reputational risk and the increasing scrutiny of tax authorities worldwide.

1. Regulatory Environment: Each jurisdiction has its own set of regulations governing funds, and these can greatly affect the operation of the fund. For example, the Cayman Islands is a popular choice due to its relatively light regulatory touch, while the United States offers a robust legal framework that may be more familiar to U.S.-based investors.

2. Investor Considerations: The fund's location can affect investors' tax obligations. For instance, a U.S. Investor in an offshore fund may be subject to the passive Foreign Investment company (PFIC) rules, which can lead to unfavorable tax treatment.

3. Operational Costs: The costs associated with running a fund in different jurisdictions can vary widely. A domicile like Luxembourg might offer a favorable tax environment but also comes with higher operational costs due to its stringent regulatory requirements.

4. Access to Markets: Some domiciles provide easier access to certain markets. A fund domiciled in the European Union might have better access to European markets due to passporting rights.

5. Tax Treaties: Jurisdictions with extensive tax treaty networks, such as Ireland and the Netherlands, can offer funds the ability to reduce withholding taxes on international investments.

6. Reputational Factors: The reputation of the domicile can affect the perception of the fund among potential investors. Jurisdictions with strong regulatory frameworks and transparency, like Singapore, can enhance investor confidence.

7. Exit Strategies: The tax implications of winding up a fund or distributing returns can vary by jurisdiction, affecting the overall profitability of the investment.

For example, a hedge fund domiciled in the british Virgin islands (BVI) might benefit from the absence of corporate taxes, capital gains taxes, and inheritance taxes. However, the BVI may not have a tax treaty with the country where the fund's investments are located, potentially leading to higher withholding taxes on investment returns.

In contrast, a fund domiciled in Delaware in the United States might face higher taxes but benefit from a more predictable legal environment and a vast network of tax treaties that could lower the tax burden on foreign income.

The domicile of a fund is a multifaceted decision that requires careful consideration of the tax implications, regulatory environment, operational costs, and strategic benefits. It is a decision that should be made with the guidance of legal and tax professionals to ensure alignment with the fund's objectives and the interests of its investors.

7. Allocation of Assets and Diversification Principles

In the realm of hedge funds, the allocation of assets and the principles of diversification are pivotal in constructing a robust portfolio that can withstand market volatility and generate consistent returns. asset allocation is the strategic distribution of capital across various financial instruments, asset classes, and sectors to optimize the risk-reward ratio. Diversification, a cornerstone of modern investment theory, further refines this process by spreading investments across uncorrelated assets to reduce the impact of any single investment's performance on the overall portfolio. This dual approach is not just about minimizing risk; it's about positioning for maximum advantage in various market conditions.

From the perspective of a hedge fund manager, asset allocation is an art as much as a science. It involves a deep understanding of market dynamics, a keen eye for opportunity, and an unwavering commitment to the fund's investment philosophy. On the other hand, investors view diversification as a safety net, ensuring their investments are not overly exposed to any single risk factor.

Here are some in-depth insights into these principles:

1. strategic Asset allocation: This long-term strategy involves setting target allocations for various asset classes and rebalancing periodically. For example, a fund might allocate 50% to equities, 30% to bonds, and 20% to alternative investments, adjusting as market conditions change.

2. tactical Asset allocation: Unlike the strategic approach, tactical allocation is more dynamic, allowing fund managers to take advantage of short-term market movements. This might involve temporarily increasing the equity position in anticipation of a bull market.

3. Diversification Across Asset Classes: A well-diversified portfolio might include stocks, bonds, commodities, real estate, and currencies. Each asset class responds differently to market events, which can help stabilize the portfolio.

4. Diversification Within Asset Classes: Even within a single asset class, such as equities, diversification is key. This could mean investing across different sectors, industries, and geographies. For instance, a technology-heavy portfolio might be balanced with investments in healthcare or utilities.

5. Correlation and Diversification: The goal is to include assets with low or negative correlation. During the 2008 financial crisis, while most asset classes suffered losses, certain fixed-income securities like U.S. Treasuries saw gains, highlighting the benefits of diversification.

6. Risk Parity: This approach assigns weights based on risk, aiming to equalize the risk contributed by each asset class. For example, bonds might be given a higher weight than equities if they are deemed less volatile.

7. Alternative Diversification Strategies: Beyond traditional asset classes, hedge funds might explore options like derivatives, private equity, or venture capital. These can offer unique risk-return profiles and further diversification benefits.

To illustrate these principles, consider the case of a hedge fund that allocated a significant portion of its assets to technology stocks in the early 2000s. While the tech bubble's burst impacted the fund, its diversified holdings in other sectors and asset classes, such as commodities and international equities, mitigated the overall damage to the portfolio.

asset allocation and diversification are not static concepts but dynamic strategies that evolve with market conditions, investor goals, and the global economic landscape. They are essential tools in the hedge fund manager's toolkit, enabling them to navigate complex markets and strive for superior returns while managing risk. The judicious application of these principles can make the difference between a thriving fund and one that struggles to achieve its objectives.

8. Risk Management and Compliance in Fund Structures

risk management and compliance are pivotal elements in the architecture of fund structures, serving as the bedrock for maintaining the integrity and stability of investment vehicles. In the realm of hedge funds, these components are not just operational necessities but strategic tools that can significantly influence a fund's performance and investor confidence. From the perspective of fund managers, risk management is about identifying, assessing, and mitigating potential threats to the fund's assets and investment strategy. Compliance, on the other hand, ensures adherence to the ever-evolving landscape of regulatory requirements, which can vary greatly depending on the jurisdiction and the type of fund structure in place.

1. regulatory Frameworks and compliance Procedures:

- Every fund structure is subject to a specific regulatory framework, which dictates the compliance procedures it must follow. For example, a hedge fund operating in the United States must comply with the securities and Exchange commission (SEC) regulations, including the Dodd-Frank wall Street reform and Consumer Protection Act, which imposes rigorous reporting and transparency requirements.

- Example: A hedge fund manager must regularly file Form PF with the SEC, providing information on the assets under management, investment strategy, and leverage, among other details.

2. risk Assessment models:

- Hedge funds employ various risk assessment models to quantify and manage market, credit, liquidity, and operational risks. Value at Risk (VaR) is a commonly used statistical technique that estimates the potential loss in value of a portfolio over a defined period for a given confidence interval.

- Example: If a fund's daily VaR at a 95% confidence level is $10 million, it means that there is a 5% chance that the fund will lose more than $10 million in a single day.

3. stress Testing and Scenario analysis:

- Beyond standard risk assessment models, funds conduct stress testing and scenario analysis to understand the impact of extreme but plausible events on their portfolios. This involves simulating the fund's performance under various hypothetical situations, such as a market crash or geopolitical crisis.

- Example: In 2008, during the financial crisis, funds that had conducted thorough stress tests were better prepared to handle the market turmoil and protect their investors' capital.

4. Compliance Monitoring Systems:

- To ensure ongoing compliance, funds implement robust monitoring systems that track changes in regulations and internal policies. These systems can alert fund managers to potential compliance breaches before they occur.

- Example: A fund might use automated compliance software to monitor for insider trading or conflicts of interest, thereby preventing regulatory infractions.

5. investor Due diligence and Transparency:

- Investors increasingly demand greater transparency and thorough due diligence processes from funds. This includes detailed disclosures about the fund's risk management practices and compliance protocols.

- Example: An institutional investor may require a hedge fund to provide an independent risk management report before committing capital.

Risk management and compliance are not static functions but dynamic processes that require continuous attention and adaptation. As funds navigate the complexities of global markets, the ability to effectively manage risks and maintain compliance can distinguish a successful fund from the rest. By integrating these practices into the core of their operations, fund managers can build resilient structures capable of withstanding market shocks and earning the trust of discerning investors.

9. Key Fund Structure Concepts to Know

As you prepare for your hedge fund interview, it's crucial to have a firm grasp of the key concepts related to fund structure. This knowledge not only demonstrates your understanding of the industry but also showcases your ability to comprehend the complexities that come with managing and investing in a hedge fund. The structure of a hedge fund is multifaceted, involving various components that work in tandem to ensure the fund's operational efficiency, compliance with regulations, and alignment with investor interests. From the legal framework that governs the fund's operations to the fee arrangements that dictate the compensation for fund managers, each aspect plays a significant role in the overall performance and sustainability of the fund.

1. Legal Entities and Domiciliation: understanding the legal entities involved in a hedge fund, such as the general partner (GP) and limited partners (LPs), is fundamental. Funds are often domiciled in offshore jurisdictions like the Cayman Islands or Bermuda for tax and regulatory advantages. For example, a fund structured as a limited partnership allows investors to limit their liability to the amount of their investment.

2. Fee Structures: Familiarize yourself with the typical '2 and 20' fee structure, where fund managers charge a 2% management fee on assets and a 20% performance fee on profits. However, variations exist, and some funds may adopt a '1 and 10' model or include hurdle rates and high-water marks to align manager performance with investor returns.

3. Lock-up Periods and Redemption Terms: Hedge funds often have lock-up periods during which investors cannot withdraw their capital. These can range from a few months to several years. Redemption terms also vary, with some funds offering quarterly redemptions, while others may only allow annual exits. For instance, a fund might have a one-year lock-up followed by quarterly redemptions with 45 days' notice.

4. investment Strategies and risk Management: Be aware of the diverse range of investment strategies employed by hedge funds, from long/short equity to global macro and event-driven approaches. Each strategy carries its own risk profile and requires specific risk management techniques. A global macro fund, for example, might use leverage and derivatives to capitalize on economic trends, necessitating robust risk controls.

5. Transparency and Reporting: Transparency is key for investors, and hedge funds are increasingly providing detailed reporting on holdings, performance, and risk metrics. Understanding the level of transparency a fund offers and the frequency of its reporting—whether monthly, quarterly, or annually—is important. A fund might provide monthly performance reports and quarterly risk assessments to its investors.

6. Regulatory Compliance: Hedge funds must navigate a complex regulatory landscape, adhering to rules set by bodies like the SEC in the U.S. Or the FCA in the U.K. Compliance with regulations such as the Dodd-Frank Act or the EU's AIFMD affects fund structure and operations. For example, a fund might be required to implement additional compliance measures to meet the AIFMD's requirements for risk management and liquidity.

By delving into these concepts, you'll be better equipped to discuss the intricacies of hedge fund structures during your interview, showcasing your readiness to contribute to the fund's success. Remember, providing real-world examples and demonstrating a nuanced understanding of these concepts can set you apart from other candidates.

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