To demonstrate its confidence in IBF, Investcorp is, during the launch period, offering a zero cost principal protection to new investors. This is only available to investors who commit between now and June 30, 2005. Further evidence of Investcorpâs confidence in IBF is that the Firm has seeded the Fund with $200 million of its own capital.
IBF 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. For IBF, Investcorpâs expert team has selected about 40 best in class funds, each diversified in investment strategy and style, to achieve consistent and stable returns with a modest level of risk.
Among the attractions of hedge funds is that they can increase overall performance when added to an investment portfolio. Although when equity markets are strong, well 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.
IBF is the eighth fund of hedge fund product from Investcorp, which has the largest hedge funds program in the region and is a recognized world leader in this asset class. Investcorp has almost US $ 4 billion of assets under management in its program. Of this, more than $1.6 billion is Investcorpâs own capital. The size of this proprietary investment is unique in the hedge fund industry, and means that there is a strong alignment of Investcorpâs interests with that of its clients. The IBF product is an important addition to Investcorpâs broad fund of hedge funds offering, which accommodates a variety of client preferences as to risk and return.
Gary Long, Investcorpâ s Chief Operating Officer, said: "Investcorp experience in this sector is unmatched in the region. Our hedge funds program is now more than eight years old. In that time it has outperformed benchmarks and proved itself in all market environments. This is underpinned by our investment team of more than 35 professionals, which has real depth of experience in multiple asset classes at 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."