Our investment process is structured around four different investment mandates with distinct return- and risk profiles:
- Relative Value: concentrated portfolio of hedge funds with low market sensitivity
- Global Macro: concentrated portfolio of macro hedge funds with variable market sensitivity and higher return- and risk expectations than the relative value portfolio
- Global Equity: investments in equity long/short and actively managed long-only funds which complement Ferd's direct equity investments
- Global Fund Opportunities: investments in specific market opportunities with higher return and risk expectations and variable liquidity.
Our objective is to generate attractive risk adjusted returns over time, both in absolute terms and relative to relevant markets and indices. The long term nature of Ferd's capital allows us to invest across the liquidity spectrum depending on where we see the most attractive investment opportunities. We have a long-standing relationship with Albourne Partners Limited, and their resources are used actively in the investment process relating to hedge funds.
Potential investments and managers are identified through regular searches based on specific criteria or quantitative factors, as well as through our contact network.
The analysis process comprises a number of quantitative and qualitative parameters. We assess the fund's investment strategy, opportunity set and return potential, as well the quality of the investment team and organization. We also analyze the sources of historical returns, with a particular focus on separating performance generated by various market exposures and performance driven by the manager's skill. The historical performance is also reviewed in the context of the current attributes of the fund, and central elements taken into account are changes to the investment strategy and investment team. Existing investments are closely monitored through dialogue with our managers and quantitative analysis of their performance.
Review of the fund's structure and operational aspects is also an integral part of the process. We assess whether the fund's liquidity terms are reasonable given the fund's strategy, and if valuation aspects are deemed satisfactory to ensure fair treatment across clients. In addition, thorough operational due diligence is carried out by Ferd's external advisor on hedge funds in which Ferd is considering an investment.