One of the main advantages to investing in

问题单项选择题

One of the main advantages to investing in a fund of funds (FOF) is that FOF provide:（）

A. lower management fees.

B. improved diversification of assets.

C. a proven track record.

答案

参考答案：B

解析：

FOF will actually have higher management fees because the FOF will charge a fee in addition to the fee charged by the hedge fund manager. Hedge funds selected by the FOF may have a good track record, but it is no indication of future performance. FOF actually have lower expected returns because of increased diversification. FOF can diversify across many hedge funds strategies to decrease risk.