Saturday, May 19, 2007

Fund of Funds - an Asian gambit

Here is some excellent analysis on fund of funds (free sub required). The gist of the story is that while fund of funds can be an excellent vehicle, Asia may not be the place to put it because there is so much money chasing deals.

In short, "the amount of capital targeting the relatively immature Asian market leaves a lot of questions open about the returns that can be achieved. Investors may be happy to gain access, but they shouldn’t necessarily expect a golden panacea on the other side of the door."

Bingo. There's still something to be said for good old fashioned fundamentals, both on the business and the legal side. I won't speak for the former, but as I've said before here, you sometimes barely have the time these days to do so on the legal. What I like to do here is, if possible, perform my due diligence while the contract is being negotiated or even during the bidding process, if such material is available. Clients will spend a little more cash up front, but at least the surprises may be fewer and farther between.