Multistrategy Hedge Funds Offer Flexibility At Lower Cost

by Phillip Morton, Investors Offshore.com

03 December 2004

Multistrategy hedge funds are more beneficial assets for investors than funds of hedge funds because they offer more flexibility and lower costs, a hedge fund conference in Spain heard this week.

"We have more flexibility in how we allocate because we can change things on a monthly basis," Lindsay Jones, head of business development at multistrategy hedge fund manager ORN Capital told delegates at the Blue Ribbon Hedge Fund Symposium in Marbella, Spain.

Multistrategy hedge funds seek to offer diversification within the same fund by investing across several different strategies to simultaneously realize both long and short term gains.

Funds of hedge funds also offer the investor diversification and reduced risk by investing their money across a number of different hedge funds. However, they can often attract multiple layers of fees, and frequently have lock-in periods with certain hedge funds, which can mean that it is harder to transfer investments and move money around.

“We charge no more than other hedge funds,” added Jones.

However, Nadja Pinnavaia, head of hedge fund strategies in Europe at Goldman Sachs Asset Management International, pointed out the funds of hedge funds have the advantage of carrying out due diligence on behalf of the investors.

"Funds of hedge funds get paid to understand investors' needs, construct the portfolios that meet those needs," observed Pinnavaia.

Recommended