Description

How will the funds of hedge funds (FoHF) business have to change to survive in the wake of the 2008-2012 financial crisis? This new research provides valuable insight. Reconsidering Funds of Hedge Funds presents the first comprehensive views of UCITS as well as recent trends in due diligence, risk management, and hedge fund deaths and survivors. The book contains original chapters by 22 academics and 16 hedge fund professionals, and includes two sections on performance: one that looks at UCITS FoHF and one that deals with traditional FoHF performance. Most chapters examine aspects of the 2008-2012 financial crisis, and almost every chapter addresses fund of hedge funds' management process before, during, and after the crisis.

Key Features

  • Covers recent advances in risk management, due diligence, tail risk, and allocation
  • Presents an in-depth analysis of UCITs
  • Balances academic and professional viewpoints

Readership

Upper-division undergraduates, graduate students, and professors studying financial risk management, investments, and investment market trends.  Financial industry professionals working on both the buy- and sell-sides of investment firms

Table of Contents

Foreword

Editor

Contributors

Acknowledgments

Introduction

Section 1 Due Diligence and Risk Management

Section 2 UCITS Performance

Section 3 Performance

Section 4 Fund of Hedge Fund Alpha

Section 5 Tail Risk

Section 6 Regulation

Chapter 1. After the Crisis: The Withering of the Funds of Hedge Funds Business?

1.1 Introduction

1.2 Institutional versus Private Investor FoHFs

1.3 The Bubble Bursts

1.4 The Aftermath of Crisis

1.5 The Excess Cash Problem

1.6 Could FoHFs Problems Have Been Prevented?

1.7 The Role of Performance Decay

1.8 Outlook

Conclusion

References

Section 1: Due Diligence and Risk Management

Chapter 2. Evaluating Trends in Funds of Hedge Funds Operational Due Diligence

2.1 Introduction

2.2 Increased Focus on Operational Due Diligence

2.3 Chapter Goals

2.4 What is Operational Risk?

2.5 The Different Types of Operational Risk

2.6 Operational Risk in a FoHFs Context

2.7 FoHFs Operational Due Diligence Frameworks

2.8 The Madoff Effect

2.9 Deep-Dive Operational Due Diligence

2.10 Broadening Scope Reviews and Declining Checklist Approaches

2.11 The Increasing Role of Operational Due Diligence Consultants

Conclusion

References

Chapter 3. The Limits of UCITS for Funds of Hedge Funds

3.1 Introduction

3.2 The UCITS Industry

3.3 Challenges for a UCITS FoHFs Manager

3.4 Performances

Conclusion

Acknowledgments

References

Recommended Reading

Chapter 4. Due Diligence: Lessons from the Global Financial Crisis for Funds of Hedge Funds with Particular Emphasis on the Asia–Pacific Region

4.1 Introduction

4.2 Due Diligence when Investing in a Hedge Fund

4.3 Investment in a

Details

No. of pages:
592
Language:
English
Copyright:
© 2013
Published:
Imprint:
Academic Press
Print ISBN:
9780124016996
Electronic ISBN:
9780124045941

About the author

Greg Gregoriou

A native of Montreal, Professor Greg N. Gregoriou obtained his joint Ph.D. in finance at the University of Quebec at Montreal which merges the resources of Montreal's four major universities McGill, Concordia, UQAM and HEC. Professor Gregoriou is Professor of Finance at State University of New York (Plattsburgh) and has taught a variety of finance courses such as Alternative Investments, International Finance, Money and Capital Markets, Portfolio Management, and Corporate Finance. He has also lectured at the University of Vermont, Universidad de Navarra and at the University of Quebec at Montreal. Professor Gregoriou has published 50 books, 65 refereed publications in peer-reviewed journals and 24 book chapters since his arrival at SUNY Plattsburgh in August 2003. Professor Gregoriou's books have been published by McGraw-Hill, John Wiley & Sons, Elsevier-Butterworth/Heinemann, Taylor and Francis/CRC Press, Palgrave-MacMillan and Risk Books. Four of his books have been translated into Chinese and Russian. His academic articles have appeared in well-known peer-reviewed journals such as the Review of Asset Pricing Studies, Journal of Portfolio Management, Journal of Futures Markets, European Journal of Operational Research, Annals of Operations Research, Computers and Operations Research, etc. Professor Gregoriou is the derivatives editor and editorial board member for the Journal of Asset Management as well as editorial board member for the Journal of Wealth Management, the Journal of Risk Management in Financial Institutions, Market Integrity, IEB International Journal of Finance, and the Brazilian Business Review. Professor Gregoriou's interests focus on hedge funds, funds of funds, commodity trading advisors, managed futures, venture capital and private equity. He has also been quoted several times in the New York Times, Barron's, the Financial Times of London, Le Temps (Geneva), Les Echos (Paris) and L'Observateur de Monaco. He has done consulting wo

Reviews

"International contributors include 22 academics in finance, business, and research analysis, and 16 hedge fund professionals. They examine issues related to the institutional framework of a special type of FOHF called undertakings for collective investments in transferable securities (UCITS) FOHFs, which were developed in response to calls for operational due diligence and improved transparency in the financial industry." --Reference and Research Book News, December 2013

"Hedge funds are now more than ever in the focus of many public debates and they are discussed by academics and practitioners as well. So the time for treating the diverse aspects of hedge funds in a book could not even be better. The book at hand by Greg N. Gregoriou will surely be a very valuable and readable contribution in this context as it covers the complete, difficult matter in its manyfold chapters and through the high expertise of the authors." --Carsten S. Wehn, DekaBank, Germany

"The 2007-9 Financial Markets Crisis also created a crisis for the fund of hedge funds industry.  After the Crisis, basics such as liquidity, transparency, alpha generation, and understanding business risks gained renewed importance.  Solutions to these criteria such as UCITS, managed accounts, and closer management of fund asset and liability risks became central to many fund of hedge funds.  Additionally, leading fund of hedge funds now focus less on 'one size fits all' solutions and more on bespoke client portfolio solutions.  The articles in Reconsidering Funds of Hedge Funds try to grapple with these industry changes and show a variety of different responses to the new environment.  Fund of hedge fund investors will find this book and important update on an industry in transition." --James Purnell, Kenmar, USA

"We have witnessed tremendous growth in the intermediation in the hedge f