| Comparison
with Fund of Funds |
|
There are two chief ways to invest in hedge funds:
directly in individual funds or through a fund of funds. Many
investors choose a fund of funds for its ready diversification.
But large-scale diversification in the hedge fund universe without
sufficient selectivity can create a dilution of talent—the
antithesis of the hedge fund opportunity. Direct investments
can be an effective way to harness outstanding managerial talent,
but they often entail the drawbacks previously discussed herein.
StoneHedge combines the advantages of direct investments with
the advantages of the StoneHedge Platform. |
|
| |
| |
Fund
of Funds |
Direct Investment |
Direct
Investment plus
StoneHedge Platform |
| Due
Diligence |
|
|
|
| Risk-Adjusted
Alpha |
Potential
for
Dilution
|
Wide
Ranging Dispersion |
Enhanced
Potential |
| Diversification |
|
Difficult
to Achieve |
|
| Independent
Risk Management |
|
|
|
| Customizable
Fund Selection
|
|
Difficult
to Achieve† |
|
| No
Extra Layer of Fees
|
|
|
|
|
|
|
Investments in funds of funds and direct investments
can both prove useful in building a hedge fund portfolio. And,
as the chart above shows, there are often significant reasons
to consider the StoneHedge approach. |
|
* |
While funds of funds typically include a sizeable
number of individual funds, they frequently still exhibit concentration
risk with regard to underlying strategies and managers. StoneHedge
will increasingly provide diversification opportunities as managers
are added to the Platform. |
|
† |
May be difficult to achieve due to high minimum
investment requirements of individual funds and the formidable
due diligence demands. |
|
|
|
|
| |
|
|
