Discuss multi-manager hedge fund strategies: their investment features, how they are put into practice and the role they play in a portfolio

Multi-manager vehicles combine strategies to diversify. A fund-of-funds allocates to external managers, offering access, due diligence and diversification, but adds a second layer of fees and exposes investors to netting risk: each underlying manager charges an incentive fee on its own gains even if losses elsewhere leave the total flat or negative. Liquidity terms may also be mismatched. A multi-strategy fund runs several strategies inside one firm with one fee on net performance, so capital moves quickly between teams and netting risk falls mainly on the manager, though operational and key-person risk are concentrated and leverage is often higher. The trap is comparing gross returns without allowing for the extra fee layer and the netting effect.