Now that the hedge fund story in the US, UK and Europe is old hat, the action seems to be focusing on funds of hedge funds (FoHFs) investment managers paid big bucks to select and watch over money given to individual hedge funds to invest.
Latest figures show US FoHFs took in an estimated $18.8 billion in new money while regular hedge funds saw $2.8 billion in withdrawals. In the US, FoHFs now represent 35% of the $2.8 trillion managed by hedge funds. Worldwide, FoHFs represent 39% of the $3.1 trillion invested in hedge funds.
This month, Magnum Global created one of the first Greater China focused FoHFs, and Orange County, CA began taking bids for FoHFs to manage some of its $7.9 billion in pension funds. In December, JPMorgan opened up an office to service the $211 billion hedge fund and FoHF business in Luxembourg. In June, Northern Trust announced it was selected to service a Gottex FoHFs. In April, Man Group became the largest FoHFs company to go public.
Many believe this activity reflects new institutional money flowing directly into FoHFs or moving from hedge funds to FoHFs.