The AIMS advisory business gives advice to investors on their hedge fund and private equity allocations, including asset allocation and portfolio construction, manager sourcing and due diligence, among other services.

Heading up this business, Quigley will be based in New York. He joins the firm from Albourne Partners, an investment consultant.

"Whether encouraged by the potential to enhance returns or mitigate risks, investors are increasingly exploring hedge funds and private equity as part of their investment programs," said Christopher Kojima, global head of the AIMS group for Goldman Sachs AM.

However, hedge fund returns took a hit last month. Most hedge fund strategies experienced widespread and significant losses in August, contributing to a 3.42 per cent fall in the hedge fund index compiled by US-based BarclayHedge. So far this year it is down 2.50 per cent.

Morten Spenner, chief executive of International Asset Management, stepped in to defend the performance of hedge funds yesterday, saying that although the correlation with equities has been very strong, the figures show these funds have dampened volatility for investors this year through turbulent times.