In this discussion of a Citi paper, on the impact of collateral management and rising financing costs for hedge funds, there is a quote from Sandy Kaul's statement:
Sandy Kaul, head of business advisory services at Citi, said EMIR and the implementation of bilateral margining for non-cleared derivatives in 2015 would lead to a steady increase in collateral demands but remained hopeful the challenge was not insurmountable. “I do not believe the collateral shortfall will adversely affect the hedge fund industry. The impact will be felt more strongly in the traditional asset management space. Hedge funds, unlike traditional asset managers, have the ability to strategically deploy their liquid collateral and transform illiquid assets and this should alleviate the challenge,” said Kaul.
Question: What is meant by "the ability of hedge funds to transform illiquid assets"?