By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Let's Think WiseLet's Think WiseLet's Think Wise
  • Home
  • Featured
  • Stocks
  • Mutual Funds
  • Terminology
  • Stock Recommendations
Reading: What is Side Pocketing?
Share
Notification
Aa
Let's Think WiseLet's Think Wise
Aa
  • Home
  • Featured
  • Stocks
  • Mutual Funds
  • Terminology
  • Stock Recommendations
Search
  • Home
  • Featured
  • Stocks
  • Mutual Funds
  • Terminology
  • Stock Recommendations
Follow US
- Advertisement -
Ad image
Open Demat account (₹0 Brokerage Lifetime)

Home - Blog - Terminology - What is Side Pocketing?

Terminology

What is Side Pocketing?

ltw
Last updated: 2022/07/23 at 4:15 PM
By ltw 1 year ago 2 Min Read 1 year ago
Share
2 Min Read
What is Side Pocketing?
SHARE

Disclaimer & Affiliate disclosure: The information provided on this post is for general informational purposes only and should not be considered financial or legal advice. Always consult with a financial advisor or attorney before making any financial decisions. Some of the links in this post are affiliate links, meaning, at no additional cost to you, we will earn a commission if you click through and make a purchase.


 

Side pocketing is a strategy used to protect investors in instruments that have risky asset exposure.

In a debt portfolio, it is an accounting approach for separating illiquid (riskier) investments from liquid and high-quality investments.

Mstock Demat account

Get Demat account (₹0 Brokerage Lifetime)

When a bond owned in the fund receives a rating drop, the fund houses move the illiquid asset to a side pocket, where existing holders receive a proportional distribution.

Latest News
Univest app referral code is DEEP5106
Waya app review
Mstock review: A Broker by Mirae asset
How to start a Zero investment business
Which is better Groww or Upstox

You Might Also Like

What is Gini Coefficient or Gini index
Terminology

What is Gini Coefficient or Gini index

1 Min Read
What is the Multi Commodity Exchange (MCX)?
Terminology

What is the Multi Commodity Exchange (MCX)?

1 Min Read
Price Elasticity
Terminology

Price Elasticity

1 Min Read
Unlimited Company
Terminology

Unlimited Company

1 Min Read

The fund’s NAV (Net Asset Value) shows solely the value of liquid assets when side pocketing is used and illiquid assets are put into a separate pocket.

Side pocketing is a technique that should be approached with caution. In addition, the value of illiquid investments is uncertain. As a result, the illiquid asset’s NAV will continue to be a source of worry.

How Side Pockets Operate

Side pocket accounts, which are utilised only by hedge fund managers and have a structure that is comparable to that of single-asset private equity funds, have been more popular in recent years. Their goal is to segregate assets that are illiquid, difficult to appraise, and often very high risk from assets that are more liquid in nature. Investments like as real estate, antiques, over-the-counter (OTC) equities, stocks with very low trading activity, stocks delisted from exchanges, and private equity investments are examples of illiquid assets that may be found in side pocket accounts.

Upstox Demat account

Get FREE Demat account (₹0 AMC Lifetime)

Although the assets of a side pocket account are reported on the records of a fund, those assets are monitored in a different manner. The accounting and valuation methods that they use are detailed in the prospectus that the fund provides for potential investors. When a side pocket account is formed, each investor in the fund is given an investment in the side pocket account that is proportional to their overall investment in the fund.

What is Side Pocketing?
What is Side Pocketing?

Subscribe to Our Newsletter

Subscribe to our newsletter to get our newest articles instantly!

TAGGED: Side Pocketing
Share This Article
Whatsapp Whatsapp Copy Link
What do you think?
Love0
Happy0
Joy0
Surprise0
Sad0
Angry0
Wink0
Leave a review Leave a review

Leave a review Cancel reply

Your email address will not be published. Required fields are marked *

Please select a rating!

Upstox FREE Demat account
M stock-by-mirae-asset
₹0 Brokerage Account [Lifetime]

It's Free

Get Latest Finance tips

Facebook Like
Twitter Follow
Pinterest Pin
Instagram Follow
Most Popular
Univest app referral code
Univest app referral code is DEEP5106
Best app that gives stock recommendations to buy and sell
Waya app review
Mstock review
Mstock review: A Broker by Mirae asset
Zero investment business
How to start a Zero investment business
2 weeks ago
Groww vs Upstox
Which is better Groww or Upstox
5 days ago

You Might Also Like

What is Gini Coefficient or Gini index
Terminology

What is Gini Coefficient or Gini index

1 Min Read
What is the Multi Commodity Exchange (MCX)?
Terminology

What is the Multi Commodity Exchange (MCX)?

1 Min Read
Price Elasticity
Terminology

Price Elasticity

1 Min Read
Unlimited Company
Terminology

Unlimited Company

1 Min Read
Tradingview
FEATURED

Get Tradingview premium free

A free version of TradingView premium is available, which gives users access…

By ltw 8 Min Read
How to Invest in cryptocurrency in India?
FEATURED

How to Invest in cryptocurrency in India?

How to Buy Cryptocurrency in India? Although cryptocurrencies are a complex new…

By Ajay Bohra 13 Min Read
Indmoney Vs Zerodha Charges
FEATUREDStocks

Indmoney Vs Zerodha Charges

Online trading platforms have revolutionized the way individuals invest in financial markets.…

By ltw 17 Min Read
- Advertisement -
Vested vs Indmoney
  • Home
  • Blog
  • My Bookmarks
  • Disclaimer
  • Privacy Policy
  • Terms & Conditions
  • Contact
Reading: What is Side Pocketing?
Share

Join Us... Its Free

You can unsubscribe anytime

Follow Us

FACEBOOK
QUORA
INSTAGRAM
TWITTER
Tumbler
PINTEREST
RSS
© 2023 Let’s Think Wise. All Rights Reserved.
  • Home
  • Blog
  • My Bookmarks
  • Disclaimer
  • Privacy Policy
  • Terms & Conditions
  • Contact
Letsthinkwise-logo
Join us FREE!

Get latest financial tips & tricks

Zero spam, Unsubscribe at any time.
Go to mobile version
lets think wise .com logo
Welcome Back!

Sign in to your account

Lost your password?