Single-manager multi-strategy funds: A misleading moniker

Wed Apr 4, 2007

David Smith, chief investment officer, Multi-Manager Group, GAM

The single-manager hedge fund classification, multi-strategy, has led many investors to categorise funds that fall into this group as potential competition to funds of hedge funds (FoHFs). However, this classification may be misleading. A close analysis of the group of funds, known as single-manager multi-strategy funds (SMMS), reveals that such funds have generally evolved into this classification because their original strategy focus was too narrow.

Most SMMS funds started life as macro or general arbitrage specialists, but many found it necessary to develop other hedge fund strategies in order not to be constrained by the cyclicality of their original focus - such as fixed income, macro trading or distressed arbitrage - and to continue raising assets while maintaining performance. The universe of SMMS funds is relatively small and easily divided into a few key sub-categories. At the same time, the spread of...

ISSN: 2151-1845 / CDC10004H

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