The difficulty of direct investing in hedge funds

academic paper

Investing in single hedge funds gives full flexibility to investors as they do not have to delegate either the portfolio construction or fund selection process to a third party.However, the flipside, as we shall see, is that investing directly in single hedge funds is reserved for sophisticated investors. The selection process is extremely challenging and integrating single hedge funds into a traditional portfolio is not straightforward.Selection-Process ChallengesSelecting the best funds re