Whats the difference between fund of funds and endowments
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(Monkey, 44
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on 11/23/11 at 11:32am
So whats the difference between the two? I heard Fof has a bigger focus on fund rasing, but from investment perspective, should be very similar. What a difference would it make for a junior analyst then?
Thanks so much ;>






It will depend on the fund of
It will depend on the fund of fund and the endowment; some fund of funds and some endowments do direct and co-investment whereas others solely allocate to outside managers. Some endowments, especially smaller endowments, may allocate to other intermediaries like funds of funds, rather than picking managers themselves.
One other difference is that an endowment should be diversified across asset classes and may have non-alternative investments as well as PE/HF etc. I've never seen a fund of funds that allocates to more than one asset class (within reason-you might have a VC FOF that does various stages of VC and growth equity, for example), though I've seen managers who have both a PE FOF, a RE FOF, and a HFOF for example.
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Thanks Kenny, thats great
Thanks Kenny, thats great insight...Im not sure if you are in the industry...but im currently work for a large endowment and looking to switch to fof.... the only reason is about LOCATION. The endowment I work for is in a college town, and I really cant stand it anymore.
Any advice will be greatly appreciated!
Kenny is right - You will be
Kenny is right - You will be more specialized (typically one asset class like HF or PE versus several at an endowment), won't do as much cross asset class and macro research, and will be paid better and have fewer exit ops at an FOF - endowment performance is public knowledge so people at good ones tend to have good exit ops. Mid level people (Associate Directors, etc) tend to have options to own equity at a F o F, which exponentially increases your potential upside - no such payoff exits in E&F.