Talk:Fund of funds

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[edit] Argument against FoF

I don't buy the idea behind fund of funds. My rationale is simple: A good money manager should be able to identify good investment target if he/she can identify good mutual/hedge funds. The article in Wikipedia has pointed out a major disadvantage of fund of funds: Fees. A high fee structure will take a big bite out of investors' gain. Investors will be charged no matter their fund of funds make money or not. So why should a good money manager pay extra cost to other money managers if he/she could have done a better job? User:Licardo 23:07, 9 March 2006 (UTC)

No. 1: Many HFOF portfolio managers do not purport at all to do what you imagine. Many HFOFs provide exposure to an array of strategies -- for instance, l/s equity, merger arb, conv. arb, short selling, stat arb etc -- that no one "money manager" could realistically claim to offer. The HFOF PM is a chef whose charge is to create an attractive stew of funds. An important goal is frequently to attain a non-correlated investment vehicle.

No. 2: HFOFs can offer entre into funds which are not open to investors, or which have a huge minimum investment. A hedge fund is not generally open-ended, and will often close (it can either be a hard or soft close, with soft being one that will take more money if you twist their arm). HedgeFundBob 13:30, 18 August 2006 (UTC)

There is no good reason in the world to invest in a a fund of funds. The marginal cost of truly and properly managing an instrument that contains more than 40 underlying positions outweighs the incremental benefit that is derived from any marginal diversification. To think otherwise is to disregard the research of Miller and Modigilani...and others...that paved the way for modern portfolio theory. There is, however, plenty of good reason to manufacture funds of funds. Chief of these good reasons is the fact that an ignorant and unsuspecting consumer population seems ever more willing to be parted from its hard earned money with the assistance of advisors that are willing to rationalize thier fees for service. —Preceding unsigned comment added by Hughmurf (talk • contribs) 05:10, 24 January 2008 (UTC)

[edit] This article should be called "Funds of Hedge Funds."

It seems primarily focused on FOHFs, as opposed to Funds of Mutual Funds.

There are probably as many if not more traditional FoF than fund of hedge funds in the world. simonthebold 23:15, 18 August 2006 (UTC)

Also, FoHF and hedge funds in general are specialised investments and largely inappropriate for most investors. simonthebold 09:52, 10 October 2006 (UTC)

[edit] New section on selecting hedge funds for a fund of fund.

Hi guys, this is my first attempt at this stuff so I would appreciate your help. I was thinking of adding a section on the issues involved in trying to select funds for a fund of funds. The current article seems to imply that selecting hedge funds is easy: you just look at who has the best track record. I would agrue that it is hard. I think a section like this might pervent some investors from doing something stupid. (Not that I haven't do some stupid things...) Does this seem reasonable or should this be put somewhere else, such as the section on hedge funds.ThatOldOldInvestor (talk) 01:06, 27 November 2007 (UTC)