Fund managers that launch hybrid funds containing features of both open- and closed-end funds are often acutely aware of some of the complications and practical issues that need to be negotiated in fund documents with LPs to ensure the structure is workable and sound. Often overlooked, however, are the operational struggles that can accompany hybrid funds, including the employment of qualified employees and third-party vendors and the development of tailored policies and procedures to mitigate conflicts of interest. Those and other issues caused by hybrid funds were addressed at a panel hosted by the Practising Law Institute as part of its Advanced Issues in Private Funds 2024 program. Moderated by Cleary Gottlieb partner Maurice R. Gindi, the panel featured Matthew Jill, partner and GC, private funds and secondaries at Ares Management; Barbara Niederkofler, partner at Akin; and Amelia Stoj, CCO and assistant GC at Foresite Capital. This second article in a two-part series analyzes key features and considerations when operating a hybrid fund, including as to LP discussions, operational challenges, management fees, carried interest, clawbacks and conflicts of interest. The first article discussed the fundraising benefits and challenges presented by hybrid funds, as well as several types of liquidity mechanisms that managers can wield to meet their LPs’ withdrawal needs. See “Structural and Operational Considerations for Hybrid Funds” (Feb. 23, 2021).