Tuesday, August 19, 2008

Insana folds FOF


Former CNBC anchor Ron Insana closed his fund of funds, the New York Times reports. Even access to mega funds like SAC Capital and Renaissance Technologies wasn't sufficient to sustain Insana's smallish fund. His experience is illustrative of the struggle of FOFs to demonstrate their value in this environment and managers will have a hard time convincing new investors to pay two levels of fees.

Fee structure is at the heart of much of the criticism of hedge funds and fees come into high relief when funds lose money. Unfortunately, for the industry, high water marks, which are intended to keep investors whole, don't factor in much to the discussion about hedge funds' management fees.

Ironically, Insana, who was not lured from his day job by the dotcom craze, wrote a book in 2002 entitled, "Trendwatching: Don’t be Fooled by the Next Investment Fad, Mania, or Bubble." It appears that the next big thing was just too good to resist...

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