PAM Guide to Wealth Management

Fund of hedge funds

Hedge funds have become more accessible via funds of hedge funds. As the name suggests, these are multi-managers who hold a number of hedge funds and different strategies in a portfolio. They offer lower initial investment requirements.

A fund of hedge funds should enable you to reduce risk, compared to investing in a single hedge fund. This is because you are spreading risk across different hedge fund managers and strategies. Indeed, some fund of hedge funds (and single hedge funds) are designed to reduce risk in a portfolio, through low correlation to other asset classes and by having low risk mandates.

Funds of hedge funds can, however, have the same liquidity issues as single hedge funds. It is important to verify that they are genuinely able to gain access to investment opportunities within top quality hedge funds.

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The PAM Directory is a comprehensive guide on comparative data focusing on asset managers, investment managers, private banks, stockbrokers, wealth managers and multi-family offices, who provide discretionary and/or advisory portfolio management services for private clients.

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