Risk diversification
The graph below exemplifies the risk reduction benefit of a fund-of-funds for a portfolio of Private Equity assets. In the FoF, the risk of capital losses are lowered to virtually zero while the median returns are above of those obtained by investing in only one private equity fund.
Source: Weidig, T., Kemmerer, A. and Born, B. The risk profile of private equity funds of funds. The Journal of Alternative Investments, 2005. Obs.: Funds-of-funds composed of 20 funds equally distributed over a 5 year period based on data from VentureXpert.
INVESTMENT FUNDS ARE NOT COVERED BY ANY GUARANTEE FROM THE ADMINISTRATOR, FUND MANAGER, INSURANCE OR FUNDO GARANTIDOR DE CRÉDITO – FGC. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. IT IS HIGHLY RECOMMENDED THAT POTENTIAL INVESTORS READ THE FUND'S OFFERING DOCUMENTS BEFORE ANY INVESTMENT DECISION IS MADE.
