Hedge funds-of-funds were developed primarily to:

A. Create new investment strategies.
B. Provide access to hedge funds for smaller investors.
C. Reduce the costs of hedge fund investing.
D. Provide liquidity to hedge fund markets.

Correct Answer: B

Hedge funds-of-funds were developed to provide access for smaller investors who were originally excluded by regulations from investing in individual hedge funds. Pooling individual funds also provided diversification and reduced the perceived risk to smaller investors.