Funds-of-hedge funds assets rise to $920 billion in Q3

An estimated third quarter total funds-of-hedge funds (FoF) assets of $920 billion was reported by HedgeFund.Net (HFN) in its study on the hedge fund market performance. This represents an increase of 4 per cent during the year.

The FoF share in the overall market, however, showed general decrease in recent quarters which, according to the HFN, indicates increasing investment in hedge funds by large investors.

FoF registered average return of 3.3 per cent in 2010 through October, 4 per cent off the hedge fund industry and 1per cent behind the S&P 1200 Global index.

Considered as a high risk/high gain investment option, hedge funds has traditionally been open only to professionals or wealthy investors.

However, the hedge funds industry now sees mainstream investors able to play the field with as little as $50,000 through the so-called funds-of-hedge funds (FoF).

Basically a multi-manager investment, FoF holds a portfolio of different hedge funds that provides investors with wider industry exposure and diversified risks associated with single investment fund.

Regular investors are seen to benefit from the FoF scheme as it gives them access to the best fund managers in the market and enables them to join funds that normally require at least $1 million to enter.