The changing face of the funds of funds industry

Wed Mar 31, 2010




Niki Natarajan, editor, InvestHedge

The funds of funds industry, as represented by the largest players with more than $1 billion or more 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 chief challenges for 2010.

Two years ago, 151 of the largest funds of funds in the world had more than $1 trillion in assets under management. This universe has shrunk in number by 25% since December 2007 and is currently home to 114 firms with $625 billion in assets at 31 December 2009, equivalent to 43% less under management than two years ago.

Although the largest players in...

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