The changing face of the fund of funds industry

Tue Mar 2, 2010



Transparency, liquidity, fee alignments and regulation are on the agenda as performance and assets turn a corner


The fund of hedge funds industry, as represented by the largest players with more than $1 billion in assets, has entered a new paradigm. Transparency, fee alignments, leverage, liquidity, fiduciary responsibilities, compensation and increased regulation are all on the agenda and likely to shape the world of hedge fund investing going forward. Getting investor sentiment for hedge funds back on side is considered by the majority of the InvestHedge Billion Dollar Club survey as one of the main challenges for 2010.

Two years ago, 151 of the largest funds of funds in the world had more than $1 trillion in combined assets under management. This universe has shrunk in number by 25% since December 2007 and is now home to 114 firms with $625 billion in assets as of 31 December 2009 - equivalent to 43% less under management than two years ago. That said, on a larger asset base,...

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