Hedge funds deliver
different risk-and-return streams to traditional asset classes.
Including hedge funds within
a portfolio of traditional assets will improve the portfolio's
risk-adjusted return over time.
Diversification across
manager styles is essential for a fund of hedge fund to achieve required
investment returns in various
market conditions.
Fund of hedge fund
management is primarily about controlling risk while attaining targeted
returns.
Diversification by manager
style is essential to achieve the investment objectives in various
market conditions.
Ensuring disclosure of
information from underlying managers is a prerequisite to conducting
effective ongoing risk management.
Dedicated specialists are
required to construct and monitor fund of hedge fund portfolios as a
result of the unique complexities
of hedge fund investment strategies.