Describe three paths for implementing the strategy of Hedge Fund A.

After a significant amount of internal discussion, Wallace concludes that the pension fund should invest in either Hedge Fund B or C for the diversification benefits from the different strategies employed. However, after final due diligence is completed, Wallace recommends investing only in Hedge Fund B, noting its many advantages over Hedge Fund C.

Sushil Wallace is the chief investment officer of a large pension fund. Wallace wants to increase the pension fund’s allocation to hedge funds and recently met with three hedge fund managers. These hedge funds focus on the following strategies:
Hedge Fund A: Specialist—Follows relative value volatility arbitrage Hedge Fund B: Multi-Manager—Multi-strategy fund Hedge Fund C: Multi-Manager—Fund-of-funds