Finalternatives.com held a recent interview with Joseph Marren, President and CEO of KStone Partners, a fund of fund manager that has three funds with $125 million in assets under management (AUM). Their returns are +20% for 2009, +8% in 2010 and in positive territory in 2011. KStone offers access to diversified alternative investments to institutional and high net worth investors. They use 25 to 33 managers in their funds that have a low correlation to the equity and debt markets. They find their managers through their networks mainly.
He believes that there will also be a role for a fund of funds manager. Small and medium institutional investors need them to provide access to a diversified hedge fund portfolio. They do not have the scale (in AUM). As for large institutions, the current trend is self-management of portfolios. Marren thinks that investors will discover that they do not have the personnel to create an alternative investments portfolio and will return to the fund of funds model.
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