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From Kirsten Bischoff, Opalesque New York:
Hedge funds of funds (FoHFs) have been quietly re-strategizing after 2008/2009 saw heavy investor withdrawals. So too, have investors into FoHFs been rethinking their strategies. Investors worried about transparency are shifting towards FoHFs that utilize managed accounts, and those concerned about liquidity are considering managers that have innovated through liquidity mandated share classes or other such structural changes.
While these innovations will certainly attract investors back to the FoHF space, Monty Agarwal, managing partner of Florida-based hedge fund firm MACM LLC and author of the newly released "The Future of Hedge Fund Investing: A Regulatory and Structural Solution for a Fallen Industry", sees a much larger problem for FoHFs.
"The current model for funds of hedge funds is a very backwards-looking, statistical approach," Agarwal explained to Opalesque. "They are looking back at the hedge fund's historical returns, run statistical models and based on that they decide, this is the fund we want to invest in. It is paramount for FoHFs to understand the process that hedge funds use in generating returns."
Agarwal, who discusses the current problem to certain approaches in hedge fund investing, says that fund of hedge funds should re-model themselves...................... To view our full article Click here
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