‘There’s none so blind as them that will not see’ was the insightful, if ungrammatical, comment of a childhood mentor about those who refuse to admit adverse reality.
The line sprang to my mind when speaking to James Hatchley, a managing director of Freeman & Co, an M&A advisory consultancy. On most other topics, Mr Hatchley expressed reasonable and sensible opinions, but when it came to the subject of funds of hedge funds, an area his firm earns a lot of revenue from, he seemed to be in a different world.
“We see funds of [hedge] funds as a net beneficiary of the current crisis,” he said. “The market is entering into a winners and losers phase.”
While many might agree with the second statement, I would have put funds of hedge funds generally firmly into the losers’ basket. When questioned more closely about what the benefit might be, he predicted “fewer, bigger, better funds of funds”.
This may be a win for the end-investors, those that still have any money to invest and have the nerve to entrust it to funds of hedge funds, but it is presumably bad news for the many funds of hedge funds not fitting this description.