{"id":23072,"date":"2011-06-16T08:05:27","date_gmt":"2011-06-16T12:05:27","guid":{"rendered":"http:\/\/www.hedgeco.net\/news\/?p=23072"},"modified":"2011-06-16T08:06:54","modified_gmt":"2011-06-16T12:06:54","slug":"summer-issue-of-aicio-hedge-funds-of-funds-must-adapt-or-die","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/06\/2011\/summer-issue-of-aicio-hedge-funds-of-funds-must-adapt-or-die.html","title":{"rendered":"Summer Issue of aiCIO: Hedge Funds of Funds Must Adapt or Die"},"content":{"rendered":"<p>&#8221; <a href=\"http:\/\/www.ai-cio.com\/channel\/ALTERNATIVES\/The_End_of_the_3_and_30.html\">The End of the 3 and 30 <\/a>&#8220;, from the summer issue of<em>aiCIO,<\/em> published today, looks at how hedge funds of funds must adapt or perish, and concludes that a large number will fold regardless of what they do.<\/p>\n<p><em>aiCIO<\/em>&#8216;s editor,\u00a0Kip McDaniel,\u00a0reports that institutional investors plan to shift from fund of funds towards direct investing in hedge funds. Recent research indicates that 32% of investors currently allocating to funds of funds will invest directly in the next three years &#8212; with another 8% poised to follow suit.<\/p>\n<p>&#8220;Hedge funds of funds were the Crystal Pepsi of the investment world,&#8221; says McDaniel. &#8220;They initially attracted considerable attention but users decided they preferred the real thing.&#8221;<\/p>\n<p>According to\u00a0<em>aiCIO<\/em>, lackluster performance and the inability to avoid a number of high profile hedge fund blowups has convinced many institutional investors that funds of funds cannot justify the extra 1% and 10% they charge on top of the traditional 2% and 20%.<\/p>\n<p>Another reason for the shift is that the central selling point of many funds of funds &#8212; access to the most highly-regarded hedge fund managers &#8212; is no longer an allure. &#8220;The access pitch preyed on insecurities and the seemingly universal desire to be part of an elite,&#8221; notes McDaniel. &#8220;When it became clear that Madoff built his Ponzi scheme largely out of this human weakness, that pitch died.&#8221;<\/p>\n<p>McDaniel reports that the access pitch has been replaced by others that emphasis customization, agglomeration, tactical adjustments and risk<em> <\/em>management.<\/p>\n<p>Ultimately, this change in strategy is likely for naught, says McDaniel. &#8220;Most funds of funds will die a natural death, as the market moves away from them.&#8221; He notes that there will still be a market for funds of hedge funds, but it will be dominated by a relatively small group of larger, established players.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; The End of the 3 and 30 &#8220;, from the summer issue ofaiCIO, published today, looks at how hedge funds of funds must adapt or perish, and concludes that a large number will fold regardless of what they do. [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-23072","post","type-post","status-publish","format-standard","hentry","category-press-releases"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/23072","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=23072"}],"version-history":[{"count":3,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/23072\/revisions"}],"predecessor-version":[{"id":23076,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/23072\/revisions\/23076"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=23072"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=23072"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=23072"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}