Leveraged DSF is a fund of hedge funds. A fund of hedge funds holds a portfolio of different individual hedge funds as its underlying investment. It has the advantage of diversifying risk by blending the risk characteristics and investment strategies of many different hedge funds, which are selected and then monitored, by a specialist overall manager.
Leveraged DSF has as its base Investcorp’s successful flagship fund of hedge funds product, Diversified Strategies Fund (DSF), but uses leverage to increase the risk and return profile. The proven DSF has achieved annualized returns of 7.7% since its launch in 1996. Using simulated data, Investcorp has estimated that Leveraged DSF would have achieved an annualized 16.3% return over the same period. Looking at equity performance, the S&P 500 index of US equities has provided an annualized return of 7.98% since 1996, but with considerably higher risk.
Among the attractions of hedge funds is that they can increase overall performance when added to an investment portfolio. Although while markets are strong, diversified funds of hedge funds may produce returns that are lower than traditional equity markets, they will make up for it when markets are weak or uneventful. They typically achieve higher returns relative to risk than traditional investments because they use a wide array of investment styles, hedging strategies and financial instruments.
Funds of hedge funds have advantages over individual hedge funds as they will produce more consistent and stable returns in both good and bad market conditions, with lower levels of risk; they also protect investors from a variety of non apparent risks inherent in single fund investments. Thus they provide a superior approach to hedge fund investing for private and institutional investors.
Leveraged DSF is the eighth fund of hedge fund product from Investcorp, one of the world’ s leading and most experienced hedge fund managers, with over US $ 3.2 billion of assets under management in its program. Of this, some $1.4 billion is Investcorp’s own capital. The size of this proprietary investment is unique in the hedge fund industry and results in a strong alignment of Investcorp’s interests with those of its clients.
For Leveraged DSF, Investcorp’s expert team has selected over 40 best in class managers, each diversified in investment strategy and style.
Gary Long, Investcorp’ s Chief Operating Officer, said: “Leveraged DSF is an important addition to our range of fund of hedge funds, attractive to investors looking for alternatives or complements to their investments in equities.
”Investcorp’s hedge funds program is now in its ninth year. In that time it has outperformed benchmarks and proved itself in all market environments and we now have a long and substantial track record in this asset class. This is underpinned by our 35-strong investment team, which has experience in multiple asset classes from world-class institutions, as well as complementary skills in trading, risk management, portfolio management and operations.
”Our clients recognize that funds of hedge funds sit alongside other alternative investments, such as private equity, venture capital and real estate, in a diversified portfolio. Globally, institutions and sophisticated individual investors are allocating a greater percentage of their portfolios to alternative investments, and Investcorp is responding to client demand.”
