Funds of Hedge Funds

A fund of hedge funds (also known as a multi-strategies fund or multi-manager fund) is a pooled investment vehicle that seeks to reduce volatility by spreading investments among many different hedge funds. These fund of funds blend a host of hedge funds in a portfolio tailored to meet investors’ specific risk/return objectives. Funds of funds offer teams of specialists who actively manage investment opportunities and monitor risk in order to maximize shareholder wealth. The fund of fund approach has become the preferred investment form for many pension funds, endowment funds, insurance companies, private banks, family offices and high net worth individuals. Fund of funds can enable investors to gain the benefits of hedge fund investing while better managing the risks.

For more information on ING’s fund of hedge fund offerings, please contact us.

Key Benefits of Investing in a Fund of Funds

A fund of fund manager understands the various hedging strategies and may be able to generate returns (alpha) through manager selection, portfolio construction and monitoring investments and managers.
A fund of funds tends to provide an investment portfolio with lower levels of individual fund and manager risk.
A fund of funds team provides the time-intensive, laborious due diligence process necessary in hedge fund selection on behalf of investors, thus eliminating their need to conduct these highly specialized functions.
The fund of funds approach allows for easier administration of widely diversified investments across a large variety of hedge funds. Fund of fund investing is an ideal way to gain access to a wide variety of hedge fund strategies, managed by investment professionals, for a relatively modest investment.
If properly managed, a fund of funds investment can reduce the risks associated with individual hedge fund investments.