Characteristics
- Funds of funds typically invest in 30 to 50 hedge funds, while a
firm such as ours, typically allocates to 8 to 10 funds of funds.
The idea is to create alpha-generating portfolios consisting of approximately
300 to 500 underlying hedge funds.
- Investment vehicles of ultra-diversified portfolios of hedge funds
are designed specifically to mitigate the risk of investing in hedge
funds.
- The investment vehicles are created with diversification processes
that are carefully analyzed and managed in a way to minimize correlations
during all types of market environments and cycles.
Benefits of the structure
- Isolation of hedge fund returns while minimizing risk
- Broad risk diversification
- Professional fund management and oversight
- Easier audits as underlying assets are the funds of funds companies
themselves, not the underlying trades at the hedge fund level
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