Based on total net assets, the most popular tender offer fund category is a fund of hedge funds. Hedge fund focused strategies have over $11.5 billion in net assets, accounting for 36% of total tender offer fund AUM, as of March 2021.
In this post we summarize the benefits of hedge funds, and look at the largest sponsors offering exposure via unlisted closed end funds.
Why Hedge Fund Strategies?
Hedge funds typically have high minimum investment requirements, and other restrictions that make them difficult for retail investors to access. Often the best performing hedge funds are closed to new investors. Fortunately, the tender offer fund structure has proven an ideal way for asset managers to bring hedge funds access to the wider public.
Academic researchers have identified three other important ways that funds of hedge funds can add value. First, strategic allocation, which reflects the long term bets made by the portfolio manager provides static beta benefits. Done properly, the fund of funds should be able to get through a downturn while minimizing the severity of losses. Second, tactical allocation shifts can also add value. Many tender offer funds that focus on hedge funds have analyst teas that identify important market trends, and then seek out managers who are best positioned to exploit those trends. Finally, fund selection is an important value add provided by funds of hedge fund managers. Identifying promising hedge funds requires extensive due diligence, and it’s often easier for a family office or affluent individual to utilize the teams offered by fund of funds sponsors.
Largest Funds of Hedge Funds
There are 28 active tender offer funds that offer exposure to hedge funds. SkyBridge Multi Adviser Hedge Fund Portfolios is the largest hedge fund strategy currently active in the market with $2.9 billion in net assets. This fund combines top down and bottom up analysis in conducting a portfolio of hedge funds across different strategy groups. Its current portfolio includes a large allocation to event driven funds. Notable top tier managers in the portfolio include Third Point and Oaktree. This fund also has bitcoin exposure, through investment in a specialist fund. In a previous post, we took a closer look at SkyBridge’s hedge fund solutions platform.
Ironwood Institutional Multi-Strategy Fund is the second largest fund in this category, with $2.8 billion in net assets. Ironwood’s fund emphasizes relative value and market neutral hedge funds. Notable managers in their portfolio include D.E. Shaw, and Two Sigma.
This table shows the ten largest funds in this category, along with their net assets as of the most recent public filing.:
|Fund Name||Net Assets|
|SkyBridge Multi Adviser Hedge Fund Portfolios||$2,932,020,789|
|Ironwood Institutional Multi-Strategy Fund LLC||$2,836,095,502|
|AB Multi-Manager Alternative Fund||$968,648,187|
|Aetos Capital Long/Short Strategies Fund||$572,192,122|
|CPG Focused Access Fund, LLC||$509,620,320|
|Aetos Capital Multi-Strategy Arbitrage||$494,978,465|
|A&Q Multi-Strategy Fund||$461,497,150|
|Hedge Fund Guided Portfolio Solution||$342,333,836|
|Alternative Investment Partners Absolute Return Fund||$322,500,198|
|Aetos Capital Distressed Investment Fund, LLC||$293,513,368|
Where To Find More Info
For more a complete list of true hedge fund solutions in unlisted closed end fund vehicles, check out the active funds page. Additional information, including expense ratios and performance history is available for premium members.