Funds of hedge funds have disappointed plenty of limited partners as of late.
In some ways, this segment of the industry has performed the worst since the financial crisis in terms of inflows. Criticism has been rampant, which has led some broker-dealers to take a different approach. Goldman Sachs has put together a new hedge fund platform for customers, which will allow them to make easier investments in hedge funds with lower minimum investments.
According to Reuters, the move was prompted by criticism that the firm's funds of funds weren't all that great and that the firm's proprietary hedge funds were equally disappointing. Now, "Goldman clients who have million or more with the investment bank can invest in the funds on the Hedge Fund Select platform…There is a minimum 0,000 investment in any single fund, and Goldman will earn a 1 percent fee on the money invested with any particular fund. A big name hedge fund typically requires an investor to put in at least million. A bank that boasts a hedge fund platform can reduce the minimum investment needed because it pools all its customers' money together into a single portfolio."
So far there are 10 funds available on the platform, but one would expect that number to grow significantly. It remains to be seen just how popular this effort will prove. Other banks have likewise moved to set up similar platforms. The key will be to offer some winning hedge funds, which will not be easy to do.
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