Funds of hedge funds underperform single strategy

Funds of hedge funds have outperformed the average hedge fund in fewer than one in every five months since 2000, according to data providers Eurekahedege.

The firm found managers of funds of funds have beaten hedge fund returns only 18% of the time since 2000. Their 9.2% return this year by the start of November was about half that of 17.9% from the industry overall. Last year funds of funds lost 19.6% - but still protected investors from more than half the 43% drop in global shares. One London-based fund of hedge funds manager says: "The sector did not pick managers very well, on average, last year. You need to select well to justify why allocators should use you." The $440bn fund of hedge funds industry has suffered as a result, lo...