Reconsidering Funds of Hedge Funds

1st Edition

The Financial Crisis and Best Practices in UCITS, Tail Risk, Performance, and Due Diligence

Print ISBN: 9780124016996
eBook ISBN: 9780124045941
Imprint: Academic Press
Published Date: 23rd January 2013
Page Count: 592
96.95 + applicable tax
77.99 + applicable tax
127.95 + applicable tax
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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


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






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



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



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




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


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© Academic Press 2013
Academic Press
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"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