Mon, Mar 30, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: The future of funds of funds

Tuesday, March 24, 2009

This article was authored by Bryan Goh, First Avenue Partners LLP, London.

We begin in the past: In the financial market collapse of 2008, one area of particular decline has been the fund of funds industry. Many fund of funds run to a greater or lesser degree, an asset liability mismatch. That is, they provide better liquidity terms than they receive from the hedge funds they invest in. The reasons for the existence of funds of funds include:

1. Aggregation of capital to provide access to hedge funds. Most hedge funds accept minimum subscriptions of 1 million USD. For the smaller sized investor, this is too much to construct a diversified portfolio.

2. Aggregation of investors for hedge fund managers. Funds of funds also serve an intermediary function for hedge funds who would otherwise incur investor acquisition costs of their own. Fund of funds incur costs of acquisition of investor capital.

3. Risk management. Investing in hedge funds involves analyzing complex risk profiles and aggregating them into a portfolio in such a way as to optimize the return to risk characteristics.

4. Manager sourcing and due diligence. As hedge fund investing is all about identifying skill and talent, as it is widely held in the investor community that the majority of hedge funds are of poor quality, there are high search costs. These search costs involve analysis of complex strategies, identif......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Other Voices: Does the hedge fund industry benefit society?[more]

    This article was authored by Don Steinbrugge, Chairman of Agecroft Partners, a US-based global consulting and third party marketing firm for hedge funds. It is no secret that the hedge fund industry is viewed negatively by a la

  2. Private credit comes into focus for investors[more]

    Bailey McCann, Opalesque New York: As investors look for a way out of the low yield/no yield environment, private credit is becoming an increasingly attractive asset class, according to a white paper from Bayshore Capital Advisors. Private credit has grown steadily since the financial crisis as

  3. Other Voices: The role of diversification in CTA portfolios[more]

    2014 brought a resurgence of managed futures strategies, or CTAs, which performed very well as a whole, outperforming all other hedge fund strategies. However, a closer look reveals that there was a wide range of performance, or return dispersion, across managers. The bottom line? Not all CTAs

  4. Neuberger Berman unit buys 20% stake in activist hedge fund Jana Partners for $2bn[more]

    Komfie Manalo, Opalesque Asia: Neuberger Berman’s unit Dyal Capital Partners bought a 20% stake in activist hedge fund firm Jana Partners worth $2bn, WSJ.com reports. The deal comes as activi

  5. Hedge fund launches fall again, $1bn funds found to outperform even smaller hedge funds[more]

    Komfie Manalo, Opalesque Asia: The number of new hedge fund launches fell again in 2014, the third consecutive year of decline, while fund liquidations saw their first drop since 2010, according to the latest HFR Market Microstructure Industry Report released by industry data provider HFR. Acc

 

banner