Reflections on the decade from Europe’s oldest FoHF families

Mon Sep 5, 2011

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LCH and Haussmann found the key to longevity is going where others fear to tread


By Niki Natarajan

Rick Sopher
Funds of hedge funds have been under fire for as long as InvestHedge has been around, indeed probably before it launched in October 2001. Rightly or wrongly, in the earlier part of this decade the double layer of fees were the main bones of funds of funds contention. Right now, 10 years on, the entire business model is being called into question.

The loss of faith in funds of funds has happened for a number of reasons. The first is simple evolution. A decade ago, many investors wanted to invest in hedge funds and they bought FoHFs as they had little knowledge or understanding.

Ten years later they are now savvier and want to try investing directly. The stories of General Motors and the California Public Employees Retirement System illustrate this perfectly. To this day, CalPERS still works with funds of funds, albeit in a different...

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