BSF European Absolute Return Fund

BSF European Absolute Return Fund

Seeking positive returns irrespective of market conditions?

During volatile market environments, many investors search for ways to increase the value of their portfolio steadily without taking on unduly high risk.  With this need in mind, BSF European Absolute Return Fund was launched in February last year.

The Fund is designed to achieve positive performance in both falling and rising markets and is managed by experienced manager Vincent Devlin, a senior member of the European Equity Style Diversified team.

• Aims to deliver positive returns regardless of the European market environment. The Fund takes advantage of the wider investment powers permitted under UCITS III to generate positive returns in both falling and rising markets.
• Ideal proposition for investors seeking lower risk. The Fund is designed to have a risk profile more typical of various bond sectors, while generating steady equity-like returns. The Fund is likely to underperform traditional long-only funds during a strong bull market, as it is not designed to take the level of market exposure that these funds have. Conversely, it aims to minimise market impact and provide positive returns when equities are falling.
• A diversification tool - The Fund aims to be uncorrelated to equity markets and other traditional asset classes and targets a beta close to zero.
  
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Tried and tested approach

During the year since its inception, we are delighted to announce that the Fund has done exactly what it set out to do:   Deliver Positive Returns Irrespective of Market Conditions

The Fund has achieved positive returns every quarter since launch:

• A winning alternative to cash - The Fund launched in February 2009, and since then has delivered +3.8%, compared to 1.0% for 3m LIBOR*.
• Steady returns despite a volatile environment - Stock markets have been particularly volatile since launch, with both significant gains and losses in the 12 months to date, but the Fund has remained true to label with a market neutral profile.

* Source: Morningstar. Fund performance is referenced here in € on a NAV Basis with gross dividends reinvested, net of expenses to end February 2010

This material is for distribution to Professional Clients only and should not be relied upon by any other persons. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. The strategies utilised by the Fund involve the use of derivatives to facilitate certain investment management techniques including the establishment of both ‘long’ and ‘synthetic short’ positions and creation of market leverage for the purposes of increasing the economic exposure of a Fund beyond the value of it’s net assets. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Funds. Investors in this fund should understand that the Fund is not guaranteed to produce a positive return and as an absolute return product, performance may not move in line with general stock market trends as both positive and negative share movements affect the overall value of the fund. The Manager employs a risk management process to oversee and manage derivative exposure within the Fund. The Fund may be exposed to finance sector companies, as a service provider or as counterparty for financial contracts. In recent months, liquidity in the financial markets has become severely restricted, causing a number of firms to withdrawn from the market, or in some extreme cases, becoming insolvent. This may have an adverse affect on the activities of the fund. The Fund will attempt to reduce (or ‘hedge’) the risk of currency movements between the Base Currency and the currency in which some or all of the underlying investments are transacted. It should be noted that the hedging strategy employed will not completely eliminate the exposure of the Fund to movements between the Base Currency and these other currencies. The hedging strategies may be entered into whether the Base Currency is declining or increasing in value compared to the currency of the underlying investments. This may have a positive or negative impact on the performance of the Fund.