You can’t be too careful with hedge funds. We have large amounts to invest so all our managers are required to make daily visits to our conveniently located head office for performance updates. We do rigorous background checks unlike mere F3s and F2s. Initial due diligence includes managers providing a pint of blood and pound of flesh for DNA analysis. We also require their great-aunt’s, next door neighbor’s second-cousin’s original birth certificate.
The required 1,000 question RFP questionnaire sorts the wheat from chaff in the swashbuckling cowboy world, that media thinks exists in hedge fund land. All trades by F3, F2 and F1 managers must be pre-authorized by our byzantine bureaucracy with approval forms to be submitted in original notarized triplicate to the numerous F4 oversight committees.
We occupy vast amounts of F3, F2 and F1 managers’ time drilling down in a paranoid display of obsessive verification. Private detectives monitor the entire life and habits of managers in excruciating detail. A red flag from preschool days will be grounds for exclusion from the F4. All managers’ personal emails, phone and voice conversations are monitored. Live feed cameras are located in every trader’s home so we can catch all those frauds the media is convinced are rife in hedge fund land. Ankle bracelets and a 24/7/365 security escort are mandatory for managers hoping to make it into our portfolio.
Funds of hedge funds? There are more than 10,000 hedge funds and over 2,000 funds of hedge funds. Choosing which FOHF has become as complex as selecting underlying managers. Now there are funds of funds of hedge funds, abbreviated to F3s or Fcubes. Due to insatiable investor demand it’s time for F4 – the world’s first fund of fund of fund of hedge funds. Solving the problem for investors on how to select F3s.
F4 hypercube will navigate the minefield, avoid headline risk and detect all those rotten apples in the F3 industry. The F4 won’t repeat the mistakes that occur at F2 and F3 levels like confusing large AUMs with best future performance, channeling money to hasbeen favorites running dinosaur strategies or insisting that their funds were true alpha generators not the usual disguised beta bandits.
We are also working on a guaranteed F4 so that we can bury even more fees in the product. We have also locked up F5 and F6 trademarks and patents for when the business evolves to the obvious next level. Quintuple and sextuple fee layers are the next big thing. If you want to diversify away all sources of risk and return the F4 is for you. Avoid the complications and headaches of direct investment in hedge funds, funds of hedge funds and F3s.
SOURCE: Hedge fund – Read entire story here.