Funds Of Funds Evolving, Confident About Future

Jun 13 2014 | 10:09am ET

Many epitaphs for fund of hedge funds industry have been written, but those involved are adapting—and confident about their ability to survive.

An Infovest21 survey shows that more than six in 10 poll respondents think the next year will be a good one for funds of funds, with just 18% fearing a negative year. Those answering the questions also gave a peek at how funds of funds are changing in order to hold on to—and develop new—clients.

Nearly one-third of firms now offer vehicles regulated under the Investment Company Act of 1940, funds that can be available to retail investors. Another 26% say they are offering more specialized products; a similar number say they are considering or have already set up strategic partnerships.

Of course, fears do remain, and the biggest among funds of funds managers is the increasing interest among institutional investors in directly investing in hedge funds, which often involves ending relationships with funds of funds.

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