Sat, Apr 30, 2016
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. Hedge funds see $14.3bn outflows in Q1, CTAs and multi-strategy lead net inflows[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry saw net outflows of investor capital in the first quarter of the year, totaling $14.3bn, data from Preqin showed. This continues from the $8.9bn overall net outflows that funds recorded in Q4

  2. Third Point calls Q1 "catastrophic" for hedge funds[more]

    Bailey McCann, Opalesque New York: The first quarter of this year was rocky for hedge funds based on aggregate performance from the industry, but now we are beginning to hear what the managers thought of it as quarterly letters make their way to investors. Dan Loeb, CEO of New York-based $17 bill

  3. Asia - Stabilization of China's capital outflows may hinge on Janet Yellen, Fink says China to do well this year as bubble threat postponed, Chinese hedge fund to invest in India’s infrastructure[more]

    Stabilization of China's capital outflows may hinge on Janet Yellen From Bloomberg.com: Whether China’s recent stabilization of its currency and capital outflows continues -- or downside pressure reignites -- may hinge in large part on Janet Yellen. If the Federal Reserve chair sticks to

  4. …And Finally - After all, judges are human too[more]

    From Newsoftheweird.com: In March, one District of Columbia government administrative law judge was charged with misdemeanor assault on another. Judge Sharon Goodie said she wanted to give Judge Joan Davenport some files, but Davenport, in her office, would not answer the door. Goodie said once the

  5. Comment - Unmasking the men behind Zero Hedge, Wall Street's renegade blog[more]

    From Bloomberg.com: Colin Lokey, also known as "Tyler Durden," is breaking the first rule of Fight Club: You do not talk about Fight Club. He’s also breaking the second rule of Fight Club. (See the first rule.) After more than a year writing for the financial website Zero Hedge under the n