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Fof invests in closed hedge funds

Offshore fund manager Liberty Ermitage has brought out a hedge fund of funds that invests only in hedge funds which are closed to new business or which have limited capacity for new investments.

The classic reserve fund is a multi-strategy product which aims to invest in funds which use directional and arbitrage strategies. Liberty Ermitage says the product will provide investors with access to a diversified portfolio which includes some long established and famous names from the hedge fund world but is not making those names public.

The company says it will negotiate access to closed and restricted funds through its contacts within the hedge fund industry.

Liberty Ermitage group executive director Andrew Whelan says: “We are inv-esting in closed funds because they tend to be the best performers and most people cannot get exposure to them.

“Opportunities to invest in closed funds may be created where we are reallocating assets on our other funds.”

Allenbridge Hedgeinfo director of global hedge fund rating and research Jacob Schmidt says: “One could argue that the better funds are closed because they are very good and have enough money.

“In general, there is added value in having access to closed managers, but managers at an early stage could be the better performers.”

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