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By Benedicte Gravrand, Opalesque London.

Funds of hedge funds (FoHFs) are the investors’ investors. They are a perfect vehicle for those who wish to have access to the hedge fund industry but do not have the time or resources to conduct proper research to find the right manager to invest in. FoHFs managers take care of the research, due diligence, allocation and management of portfolio. Investing in a FoHFs will incur a second layer of fees (usually around 1% management and 10% performance) but the net performance of these vehicles remains very attractive.

In Opalesque's first 2009 Roundtable (which recently took place in Zurich, Switzerland), one of the topics touched upon was the future of FoHFs. Alexander Ineichen, Managing Director at UBS Global Asset Management in Zurich, said "Right now you can hear a lot of people criticizing the fund of funds model. They argue that its hey days are over. However, I have a different view on that. I believe it is mainly fund of hedge funds that are in the business of constructing conservative portfolios, not hedge funds. Hedge funds are the building blocks of a conservative portfolio.”

Some FoHFs statistics

Standard & Poor’s recent sector update on Fund ......................

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