Funds of hedge funds: A market where the multi-manager still dominates

Tue Mar 4, 2008

Although funds of hedge funds still account for the lion’s share of the market, there are changes afoot that could well see them having to work harder for their business

Italian funds of hedge funds are clearly the dominant players in the domestic hedge fund industry. Approximately 206 funds of funds (including cloned versions) account for around 94% of the overall market share. For the most successful firms, growth has been rapid in recent years, while the top 10 players have all crossed the €1 billion asset hurdle.

One feature of the Italian market is that investors typically request funds with different risk profiles, rather than strategy-specific funds. As Italian investors have traditionally demanded lower-risk products, low-volatility funds of funds account for just over one half of total assets. The remainder of the market comprises medium-volatility (32.5%) and high-volatility (10.8%) funds of funds. And, within this overall...

ISSN: 2151-1845 / CDC10004H

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