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From Benedicte Gravrand, Geneva:
Investing in 200 to 300 hedge funds at the same time with only Eur50,000 (US$70,000) can be an attractive prospect: you get all the added-value. ‘Added-value’ is the F3 funds’ by-word against the charge that they dilute returns. “When you have a strategy that is really diversified, there is a great chance to do well,” Mr. D’Auriol, D’Auriol Asset Management’s director, said to Opalesque in an interview. The Switzerland-based firm manages the 3F fund called D’Auriol Alternative SPC.
There are less than ten 3F funds in the world, half of which based in Switzerland, and they have been in existence for around 5 years, generating 5 to 12% net p.a. with a lesser volatility than that of FoHFs.
Don’t predict, diversify
The principle of FoHFs is the selection of the best single hedge funds for lower volatility and steadier returns. The 3F funds claim to outdo these aspects by increasing the level of diversification and thereby reducing the fat tail risk and providing even steadier returns. By investing in 5 to 20 FoFs, F3 funds can have exposure to over 200 single managers in their portfolio. “We do not believe in predictions here”, said Mr. D’Auriol. “That is why we like to diversify”.
In terms of risk levels, F3 funds are twice removed from FoFs, in case of a HF fraud or collapse. Also, F...................... To view our full article Click here
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