Final answer:
A fund of hedge funds may only be purchased by investors meeting SEC-established standards, and they typically carry higher management fees than individual hedge funds. There is no standardized minimum holding period, and performance compared to traditional mutual funds can vary.
Step-by-step explanation:
Concerning the investment in a fund of hedge funds, the statement that is true is that these funds may be purchased only by investors who meet standards that are established by the SEC. Investors often need to qualify as accredited or qualified purchasers, meaning they must satisfy certain income or net worth criteria. Unlike conventional mutual funds, funds of hedge funds might require a long-term commitment and do not have a standardized minimum holding period like the six months mentioned. It's also not accurate to claim that these securities will always outperform traditional mutual funds over time since performance is subject to a wide range of factors and can vary significantly. Lastly, it is common for funds of hedge funds to carry higher management fees than individual hedge funds due to the additional layer of fees from the fund managers selecting the underlying hedge funds.