Even if you have enough cash to meet the demanding minimum requirements to invest in a high-performing hedge fund, it's hard to gain access because fund managers can be selective in choosing their investors when they're oversubscribed.
Fund of funds provide an alternate way to access funds that you can't on your own because you don't have the necessary relationships, demonstrated appetite for illiquidity, or awareness (e.g. funds abroad). Typically, fund of funds provide exposure to a combination of strategies that are uncorrelated to the overall stock market. These investment strategies are often categorized as:
- Event driven
- Convertible arbitrage
- Equity market neutral
- Long / short equity
- Dedicated short bias
- Emerging markets
- Managed futures
- Global macro
- Fixed income relative value
But, if you're opposed to paying additional fees for a fund of funds, you might want to explore hedge fund replication instead.