Fund of hedge fund

The Jolly Contrarian’s Glossary The snippy guide to financial services lingo.™ Go Premium Index — Click the ᐅ to expand: Glossary Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

For the person who wants the exhilarating returns of a proven trading wizard, but is prepared to pay extra to dampen the volatility of that risk, by employing someone with a colossal conflict of interest, for a modest running fee, to make that decision for him.

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.

See also

• Hedge fund
• Ultimate client
• Look, I tried