Funds of Hedge Funds: One and Ten, Never Again?
Yale University’s investment guru, has called them “a cancer on the institutional-investor world” and says they “facilitate the flow of ignorant capital”. His distrust of funds of hedge funds, which channel investors’ money to a portfolio of managers, is apparently shared. Investors allocated nearly $26 billion of new capital to single-manager hedge funds in the first quarter of this year but withdrew around $12 billion from funds of funds. At the end of 2007 funds of funds controlled around 43% of assets under management in the industry; by the first quarter of 2010 their share had fallen to 34%, according to Hedge Fund Research.