Hybrid funds first emerged on the scene in the post-2001 downturn. These funds combine a traditional hedge fund approach to investing in liquid assets with private equity-style investments in companies and long-term projects. Initially designed to take advantage of long-term opportunities in distressed markets, some of these funds were also created 'by accident' when hedge funds were forced to side-pocket illiquid holdings. Many of these funds reverted back to type during the market recovery.
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