The value proposition for fund of hedge funds (FoHF) focuses on their ability to select good managers and conduct comprehensive due diligence. Here are some things investors should consider:
Manager sourcing: How does the FoHF source managers and how comprehensive is the manager database?
Identifying skilful managers: Truly skilful managers should provide consistently positive returns with low market correlation. However, the universe of skilful managers is small - less than 5% of the 10