The ripple effect of last summer’s credit
crunch has taken its toll on funds of hedge funds, with more
than a third of the firms suffering net outflows. While the
six-month survey of fund-of-funds asset growth for the year
ended June 2008 found that the largest funds of funds, those
with $1 billion or more under management, had grown 4.55%
through midyear, the forecast for the full year’s
growth is drastically bleaker, and likely to show net outflows
for the first time since the survey has been conducted.
The fallout from deleveraging is starting to take its toll
on the fund-of-funds universe. The costs of exposure to
Anthracite and Petter Worldwide are still unclear, but will
adversely impact the assets under management in the broader
fund-of-funds industry. If both of these issues are not
resolved, billions of dollars invested...