Visual Guide to Hedge Funds

CHAPTER 14 Fund of Hedge Funds

Afund of hedge funds is a significant source of capital for single-manager hedge funds; the fund of funds structure provides a necessary, diversified, and democratizing platform by which investors can allocate capital to the hedge fund space. For some investors, the fund-of-funds structure is the only way to responsibly invest in hedge funds because the investor may lack the time, resources, or knowledge to actively manage a portfolio of hedge fund investments. Similarly, an investor may not want to put all their eggs in one hedge fund’s basket, thus risking the chance that that hedge fund or, more broadly, the strategy, may suffer losses. Of course, there are disadvantages to the model, as you will learn in ...