The Challenge: A corporate entity allocated to multiple hedge funds of funds.  The entity realized that the combination was likely sub-optimal as a hedge fund allocation.  They engaged us to evaluate the current structure, and to develop a plan to improve the allocation.

 

The Solution: Our team identified the strategy areas of overlap and gaps, as well as fee and liquidity inefficiencies within the existing structure.  Our recommendations focused on replacing sub-optimal managers, adding diversifying strategies, and developing a tactical allocation overlay that would influence the inter-strategy movement of capital going forward.

 

The Result: Recommendations for manager and structure improvements provided a more attractive risk-adjusted return and minimized drawdown expectations. Once the structural enhancements were implemented, we provided monthly monitoring and commentary for the overall portfolio.  Additionally, we embarked on a campaign to educate the client on the benefits of allowing some direct hedge fund exposure as part of the hedge fund mix.  Ultimately, the client determined that a portion of the allocation would be comprised of direct hedge fund managers as well, which were then sourced by members of our team.