The Rise of Fund of Funds

LONDON, July 8, 2011 -

More and more the solution for wealthy individuals and
institutional investors is to have your own private fund of funds
(FoF), says Maggie Rokkum-Testi, General Manager and CIO of Thalia
SA, in a new article for World Finance magazine.

Anyone reading the financial headlines in 2008 could be forgiven
for thinking the hedge fund industry quietly folded its tents and
melted away into the desert. Not so, says Rokkum-Testi: despite a
decline in overall assets under management of 43 percent between
2008 and 2009, the industry survived and has been slowly rebuilding
itself.

The article - published in the July-August issue of World
Finance - explores how a complex mix of events in 2008, culminating
in the panic around the Madoff scam, exposed a number of investment
managers who hadn’t done their homework. Even those companies like
Thalia, which was not exposed to Madoff thanks to its thorough
qualitative due diligence, had to work hard to manage the emotions
of their investors.

Despite this turbulence, there are still more than 10,000 hedge
funds in operation (estimates vary), and as such choosing funds to
suit an individual investor’s needs can be a minefield, says
Rokkum-Testi. “If you are a single wealthy person or small
institutional investor you would have to diversify across at least
five or six funds minimum to spread your exposure to the different
investment approaches,” she says - but poor diligence can leave an
investor exposed to the same risk multiple times. That’s where the
capabilities of an experienced hedge fund investor are most
valuable.

“Transparency is a key issue in our industry,” Rokkum-Testi
says. “If you own a FoF that has 25 positions you should know
exactly what funds are in that portfolio, but many FoFs only offer
the top five positions and may not even indicate position sizes.
The danger here is that a medium sized investor purchasing three or
four FoFs may be doubling or tripling their exposure to a manager
without knowing it. It is very important that the end investor gets
the information he needs in terms of what kind of managers they
have in the portfolio.”

To find out more about how Thalia creates an effective fund of
funds, pick up a copy of the July-August edition of World Finance
magazine or view the article online at href="www.worldfinance.com/news/special-reports/article1992.html">
www.worldfinance.com/news/special-reports/article1992.html

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For further media information contact: World Finance, Michael McCaw, Editorial Department, +44(0)20-7553-4156, michael at worldfinance.com