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.

Funds of hedge funds: Fofs cut new managers

According to prime brokers in New York and London, funds of hedge funds are reducing the number of new managers they are taking on their books, and, in some instances, are reducing their existing portfolios of managers. One prime broker says that some funds of hedge funds have reduced their books of managers by 10% to 20% over the past two quarters.

Vineet Kapur, co-head of North American prime brokerage capital introduction at Morgan Stanley, says his firm has noticed this trend. "We have seen funds of hedge funds decreasing the number of managers on their books, and allocating the extra money among their top existing managers," he says. Increased capacity among the largest and most successful hedge fund managers has enabled investors to put more capital to work with its best-of-breed base. Kapur says that very few top managers are closed to new money.

In addition to giving them the ability to tell end investors that allocation is truly with the best in class, funds of hedge funds are being swayed towards taking on fewer new managers for several reasons, says Kapur.


"If a fund of hedge funds has only a small holding in a manager, and does not want to grow that position, or the underlying manager is not itself growing, then ceasing to invest will free up due diligence time and costs that could be spent on a manager whose positive performance will really impact a large portfolio," he says.

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.


Unlimited access to and

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


Unlimited access to and, 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


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