Investment manager Select Asset Management has decided to reduce its allocation to hedge of hedge funds, instead directing funds towards single manager hedge funds.
"The reasons for this are issues relating to the fund-of-hedge-fund structure as a whole which came to a head last year," Select head of portfolio management Robert Graham-Smith said.
Select has allocated 8 per cent of its Select Alternatives Portfolio (SAP) to hedge fund beta product the AQR Wholesale Delta Fund.
Launched in September by AQR Capital Management, the fund is a liquid, transparent and low-cost product that provides access to a diversified portfolio of core hedge fund strategies.
Select is also reducing its allocation to the Gottex Market Neutral Fund.
"It is currently in the region of 12 per cent, but that is decreasing," Graham-Smith said.
In addition, Select has also lowered the minimum allocations to hedge funds within its SAP portfolio by 5 per cent.
"We have also allowed the portfolio to hold more cash in light of last year and the liquidity issues in the hedge fund industry," Graham-Smith said.
"So we've increased the amount of cash that the alternative portfolio can hold to 20 per cent ... we have acted to hold more than we normally would in the short term over the last 12 months."
