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Benedicte Gravrand, Geneva: Why should you invest in a FoHFs? What are the recent developments in the FoHFs space? What makes a fund of hedge funds successful? These topics are explored in our Monday series on funds of funds.

Jersey City, NJ-based Prisma Capital Partners LP manages a variety of FoHFs and boasts that its investment professionals each have, on average, 20 years of investment experience. Mr. Girish Reddy, one of Prisma’s managing partners, gave Opalesque an overview of Prisma’s research on the difference between FoHFs and multi-strategy single-manager funds.

Is a FoHFs just a multi-strategy fund with extra fees? Mr. Reddy’s white paper is to be published in the winter edition of The Journal of Alternative Investments (Source). “The research was prompted by our clients’ questions,” Mr. Reddy said. The key issues tackle investment alpha, risk management and business model.

Value-added from strategy allocation versus manager selection Prisma’s researchers found that there was not enough database information going back in time to tell them where returns were more attractive. “The universe of multi-strategy managers was very limited when we looked at the historical background and also the (depth) of the managers, it was not long enough to make a bold statement for a period of time. In order to correct for that,......................

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