October 29, 2006
Fund Of Funds Lack Luster, Complain Investors
I always thought that fund of hedge funds would be the mutual funds of the hedge fund industry. They would be reliable and would ensure decent returns to investors. So, the fact that investors were unhappy with these fund of funds, just didn’t sound right. But then if you don’t perform, even a monarch will face pressure from his/her subjects, right?
Investors want these fund of funds to demonstrate their investment value. Recent disappointing performances have made investors re-assess the value proposition offered by fund of hedge funds, according to a Fitch report. Many investors are even wondering whether it is worth paying an extra layer of fees only to experience a disappointing performance. The main reason is that funds of hedge funds have been unable to effectively diversify their risks. Investmentexecutive.com reports:
“Funds of hedge funds now face increased competition, greater scrutiny from investors and are increasingly constrained by limited capacities and a higher correlation of hedge funds,” says Aymeric Poizot, director at Fitch.
Read more: Fund of hedge funds face investor pressure due to disappointing performance
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