What does public offering fof mean? What's the difference between internal fof and external fof?
What does fohf mean?
Fundohedgefunds(FoHF) is a combination of hedge funds, which avoids the high volatility of traditional funds, provides hedging function, and can achieve relatively stable expected annualized expected returns. Because of its stable performance, the hedge fund parent fund provides a good asset allocation platform and becomes a sharp weapon for global asset allocation.
Principles for the formation of hedge fund's parent fund;
Here is an example to illustrate the basic composition principle of the "blue fund", the parent fund of Chunshan Capital Hedge Fund in the United States.
First of all, in order to reduce the overall risk of the portfolio, blue funds follow the principle of low correlation (or irrelevance) when choosing investment targets, and only when the correlation with other funds in the portfolio is very low can they be accepted. This is very important.
Secondly, the construction of the parent fund portfolio is related to its judgment on the general trend, which determines the allocation ratio and investment strategies of the blue fund in each sub-fund. This judgment ability is one of the core competitiveness of excellent parent funds. For example, when the market trend is uncertain and sideways, funds with long and short strategies usually perform well; In this case, event-driven funds based on behavioral finance will also perform well.
Thirdly, in terms of specific allocation, Chunshan Capital selects 20-25 funds from more than 5,000 hedge funds around the world, invests in different industries, regions and financial products, and establishes a diversified investment portfolio that meets investors' asset allocation objectives.
Among them, the basic allocation is 6-8 large-cap funds. Its characteristic is that although the rate of return is not high, it is very stable, accounting for about 30%, which plays the role of cornerstone investment; The middle layer is 15- 16 small and medium-sized fund. They are characterized by small scale, but flexible and large room for growth. They are tomorrow fund companies, accounting for about 40%. In addition, the proportion is some event-driven special case funds and short-selling mechanism funds that can play an insurance role when the market falls sharply, accounting for about 30% of the investment.
Therefore, for investors, investing in a good parent fund is like investing in a package of excellent hedge funds with low volatility. An excellent parent fund must pass the triple test of portfolio structure, investment target selection and specific allocation, and at the same time put forward higher requirements for the parent fund manager in many aspects such as general trend judgment, risk control and product resources. What standards, investment targets, investment strategies and how to allocate them are also the core elements to measure the competitiveness of the parent fund.