Fund of hedge fund
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For the person who wants the exhilarating returns of a proven trading wizard,[1] but does not care for the volatility of that risk, and so will pay someone else by employing someone, for a modest running fee, to make dampen that volatility — the very volatility that is so exciting, by the way — by diversifying his investment across a range of funds.
It will not have dawned on such a client that by paying two percent running to each hedge fund and one percent to the fund-of-funds manager, his money must earn three percent per annum before he gets anything and even then (thanks to the 20% success fee on any net upside of each hedge fund and 10% success fee on any net upside of the fund-of-fund manager) for following a low risk diversified strategy, these market professionals must make fully tree percent return with the ultimate client’s money before he breaks even, and even then he will only see seventy cents on any dollar his actual money earns.
Of course, you could always by an index tracker.
See also
References
- ↑ ...whose contrarian directional position may, if she sticks with it until the cows come home — currently expected to be just before Herbalife finally collapses amid a chorus of stunned, recrimination-anticipating shrieks of horror.