Defined Risk 12 is an actively managed hedge fund. The Fund's objective is to generate positive returns with low market correlation and at the same time maintain a constant level of risk of 12 per cent over time measured as annualized volatility). In order to reach these objectives the Fund can invest in a broad array of vehicles, such as long-only and absolute-return unds, ETFs, derivatives, etc., that together cover a large universe of assets ranging from different segments of the equity and fixed income markets to commodities, GICS-sectors and currencies.
The Fund's objective is to maintain a constant level of risk over time, while diversifying the investments over a wide range of asset classes and strategies in order to create stable excess returns, above traditional asset portfolios. The Fund has four sources of excess returns, alpha: constant risk, diversification, manager selection and tactical allocation. The first two are considered as structural sources, i.e. are derived from the construction of the Fund and its investment universe. The latter two are considered as active, i.e. the alpha is created by implementing asset allocation decisions and investing in other portfolio managers that have proven to generate stable and high excess returns.