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Fund of Hedge Funds

A fund of hedge funds represents a portfolio of unrelated hedge funds that is characterized by a high degree of diversification. On the other hand, the fund of hedge funds can be concentrated on either a sector or geographic region or it can enjoy a high diversification among sectors and industries.

A fund of hedge funds tends to generate higher levels of returns than stock portfolios, mutual funds and even individual hedge funds. This type of investment has gained wide popularity among pension funds, insurance companies, endowments, private banks and etc. thanks to the many benefits they offer relative to other investment tools.

Another characteristic of a fund of hedge funds is that it provides its investors with the possibility to apply more strategies, styles and use the services of more hedge fund managers. All of these greatly facilitate the management of the portfolio.

Funds of hedge funds are more beneficial than standard investment funds in term of higher predictability of returns. Additionally, they are preferred as means of achieving higher diversification in an investment portfolio.

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