What is Fund of Funds
A fund of hedge funds is a private investment fund that allocates it’s capital into different hedge funds to create a portfolio of Hedge Funds. For the investor it provides an opportunity to make one investment into multiple hedge funds. This enables the investor to diversify the risks associated with a single strategy investment fund.
A Fund of hedge funds selects, monitors, and manages the hedge funds in the portfolio. The management team of the fund is responsible for monitoring the performance and aollocation of the funds as well as hiring and firing the managers in the fund. Funds of funds conceptually can provide extremely useful services for many hedge fund investors.
One of the major advantages of a fund of funds can be summed up as access to high-quality funds with proven managers, maximum diversification, and cost effectiveness
