The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Time for FoHF to reassess their strategies

With hedge funds collapsing at record rates, funds of hedge funds will need to reassess their strategies. If you can’t beat them, join them.

Research shows that 5% of hedge funds went bust in 2005 [see Asset allocation: Hedge funds in M&A turnabout, this issue], and that figure is conservative given that these were funds that were transparent and therefore on the public radar screen. Such figures add to the belief that 2006 will be the year for sector consolidation.

With SEC registration leading to increased costs, and lack of volatility and opportunities impinging on returns, smaller hedge funds, particularly those running single strategies, will be forced to club together with their peers to form multi-strategy organizations. Pending consolidation among managers is not new news; what has not been considered are the implications for funds of hedge funds.

The pool of hedge fund managers from which funds of funds can choose will naturally diminish, making it harder for the funds of funds to convince end investors that they can add value. And as hedge fund managers club together, they become more professional and transparent, raising questions about the need for funds of hedge funds as providers of due diligence.

If funds of hedge funds want to stay in business, they will have to take a leaf out of hedge fund managers’ books and seek to diversify their business lines.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree