Funds of Funds: Adding value in 2007

Wed Apr 16, 2008

Niki Natarajan, editor, InvestHedge

Funds of hedge funds enjoyed a largely successful year in 2007. Despite the credit crunch and the meltdown in the US sub-prime mortgage market, which kept the fund of funds industry on its toes, the multi-manager universe returned over 8.8%, almost as much as the return in 2006, the year that suffered the Amaranth blow-up.

And yet, the little known net-of-fees number, that is perhaps most remarkable and reminds investors why funds of funds should not be overlooked, is that the underlying global hedge fund industry globally was up 7.95% for 2007, according to the HedgeFund Intelligence Global Composite Index. Perhaps, this will finally silence those critics that argue funds of funds do not add value.

Within the fund of funds industry, however, there is huge performance dispersion among the groups with funds like The Merriwell Fund, the top performing global multi-strategy fund of...

ISSN: 2151-1845 / CDC10004H

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