Easier Finance – Standard & Poor’s Fund Services has warned about some of the risks of direct investment in hedge funds, thrown into sharp relief by the collapse of multi-strategy hedge fundAmaranth Advisors last September.
“Perhaps the most critical lesson coming from the Amaranth debacle is the importance of diversification – not only by strategy but also by manager,†said fund analyst Randal Goldsmith. He cautionedinvestors who might try to save costs by investing in a multi-strategy hedge fund rather than a FoHF, noting that this does not provide manager diversification and the range of strategies is limitedby the manager’s skill set.
