An Alternate Route Through the Hedge Fund Maze
Laurence Neville
12/01/2003
How does the product meet
redemptions?
What will happen if many investors try to sell at once? Where will the money to fulfill these redemptions come from?
How does the product track
the index?
Does it invest directly in the index’s hedge funds or does it work like an exchange-
traded fund and track the index? What
are the advantages and drawbacks of
the approach it uses?
Who does the due diligence
on the funds in the index?
What experience do the index providers have in the hedge fund industry? What research is done on the funds—and the principals of the funds—in the index? How often are they reviewed?
How strict is the index?
Ask how long funds have had to be in
existence before they can be considered
for an index. Ask your adviser what happens to a fund in the index that fails to supply information when it is requested.