04/03/2010 Author: Zaki Abushal

New FoHF model could be put to the test in 2010

We’ve heard this before, but 2010 really could be a make-or-break year for the fund of hedge funds (FoHF) industry.

Already, the business model has changed dramatically from what it was 18 months ago; now a provider of liquidity and bespoke mandates to institutions, rather than a straightforward comingled product provider. In this way, it’s becoming more difficult to gauge the strategy's success based solely on returns, since this doesn’t account for individual institutional mandates, which make up more and more of the industry, particularly for the larger FoHFs.

Even so, with around 1,500 FoHFs posting returns every month, there’s enough to work with. January’s returns were a little less than flat, with the strongest from the fixed income FoHF managed by Permal Fixed Income Holdings, up more than 1% in January. Of the smaller FoHFs the Old Mutual Emerging Managers Fund hit 3.58%; one of two strong-performing Old Mutual FoHFs in January, the other, Old Mutual Absolute Return Fund, was up 3.1%