Thursday, June 08, 2006

Hedge Fund of Funds

Most investors can achieve similar performance in a properly diversified portfolio of stocks and bonds as they can in the average Hedge Fund of Funds (HFOFs), according to a historical analysis of hedge fund investment performance by Presidio Financial Partners LLC.

The fiduciary logic behind holding a HFOF can be challenging for many ERISA pension plan sponsors. Now, the investment premise may be suspect as well. Ultra high cost, ultra low transparency and fiduciaries that arent well positioned to conduct appropriate due diligence or fully understand each funds investment strategies and risks are not charcteristics of prudent management.

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