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.

Hedge fund strategy: Top-down or bottom-up? What should FOHFs be doing?

Is manager or strategy selection the key for fund of hedge funds managers?

Commerzbank recently relaunched its multi-strategy fund of hedge funds, where it will be applying a top-down asset allocation strategy within its manager selection process. “The range of hedge fund strategies is now so vast, and many of those are highly dependent on the economic environment,” says Mehraj Mattoo, global head of alternative investment strategies at Commerzbank Corporates and Markets in London. “Particularly so for those where the exposure is directional, such as CTAs or where the hedge fund activity depends on the stage of the economic cycle, such as global macro funds or merger arb funds. Some of the problems the hedge fund industry encountered in May and June of 2006 were where managers and funds of hedge funds partly got the underlying economic assumptions wrong. It is therefore important to have a top-down element in selecting managers. I think most funds of hedge funds would claim to have a top-down approach but not many have made this an integral part of the investment process; this is particularly important for multi-strategy funds of hedge funds. Some are still doing due diligence on a large pool of hedge funds to determine the alpha generators without regard to the broader macro environment.”

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