With the extra layer of expenses that they add on to a hedge fund investment, in this tough environment, is it really a surprise that hedge funds of funds are having big cash outflows?
"Most of the large funds of funds these days have many of the same positions, and investors are realizing the duplication," said Rachel Minard, president of Cogo Wolf Asset Management LLC, a San Francisco-based fund-of-hedge-funds firm with $100 million under management.
From 1999 through the end of June, the number of hedge funds had jumped 147% to 7,662, and the number of funds of funds grew 413% to 2,642.
The most recent data from Morningstar Inc. in Chicago shows that individual hedge funds had net inflows of $10.7 billion in June, while funds of funds suffered $9.2 billion in net outflows.
"Generally speaking, I think a lot of people are starting to look at the funds-of-funds model, wondering what they're getting for the added layer of fees," said Ryan Tagal, director of hedge funds at Morningstar.
Funds of hedge funds losing their luster - InvestmentNews
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