The market threw up in its mouth a little bit at the news that Sentinel Management Group had stopped allowing its clients to withdraw funds. Because Sentinel managed short-term money for hedge funds, there were worries that some hedge funds might be unable to access their most liquid assets to meet margin calls and redemption requests, which in turn might hit the prime brokerage counterparties and investors. Even though Sentinel was a small firm, people were worried that the news could set off a domino effect. And then people started to worry that fears of a domino effect could set off a domino effect. Fear itself, and all that.
Although it’s still early, the worst fears—and fears of fears—seem not to have been realized. And so it might be time to have a chuckles at Sentinel’s expense. Their website seems to be down right now but Google cache has preserved their old Frequently Asked Questions Page with some awkward answers that have turned out not to be entirely accurate. Here are a couple questions that deal with client access to cash.
How is Sentinel different from a money market mutual fund?
• Most importantly, clients have immediate access to their cash, regardless of market conditions. (A mutual fund is allowed to postpone redemptions up to five business days in unstable market conditions.)
• Second, through Sentinel, clients know exactly what they own. Sentinel sends daily emails (or faxes, if preferred) to each client reporting the total amount invested, the interest earned, and supporting securities. In contrast, mutual funds are typically sent statements on a monthly basis at most, and report assets owned by the fund only quarterly or semiannually, often two to three months following the reporting date.
How frequently can I deposit or withdraw cash?
• Sentinel clients can withdraw 100% of their cash daily. Sentinel accepts deposits of any amount daily. A cutoff time of 4:00PM (eastern time) applies for notification of intent to redeem or make deposits same day.
Sentinel’s FAQ [Google Cache]