HI Varengold CTA Hedge

The best German fund of hedge funds 2007 & 2008

The HI Varengold CTA Hedge seeks to provide investors with stable returns not correlated to stocks and bonds. It gives access to a portfolio of a broad range of Managed Futures Managers, according to the principle of risk diversification across time frames, markets, and strategies. In 2007 and 2008, the HI Varengold CTA Hedge was awarded multiple times as the best German Fund of Hedge Funds by I.B.C Consulting for Institutional Banks and the €uro-Fund Award.

Varengold Alternative Alpha

German UCITS III fund with daily liquidity

The Varengold Alternative Alpha opens up access to the attractive universe of alternative investments. Daily fungibility and conformity with UCITS III improve liquidity and transparency. Through a multi-level, index-based selection process, international asset managers are inspected and selected, thus creating a dynamic portfolio, which is continually adjusted to the changed market conditions.

Managed Account Platform

Germany's first manager platform

Varengold investmentaktiengesellschaft mit Teilgesellschaftsvermögen opens up new possibilities for institutional investors: The Varengold managed Account Platform offers investors their first chance to invest in individual funds operated by successful international top managers from the managed futures and global macro segments.

The benefit for investors: all asset managers listed on the platfrom are subjekt to German law and undergo an independent and ongoing risk management process. This offers maximum security, daily liquidity and complete transparency.

Hedge funds have been getting a lot of press lately, but many people aren’t quite sure what a hedge fund is. Hedge funds are similar to mutual funds, but take a different overall investment approach.

In 1949, Alfred Winsley Jones gave birth to the concept of a hedge funds with the creation of his fund. Jones wanted to find a way to profit in falling market phases, not just rising ones. By making use of short selling and margin trading in his investment strategy, he was able to avoid many of the drawbacks to the traditional “buy and hold” strategy that traditional mutual funds use.

Hedge funds don’t aim to beat any market index; rather, they generally strive to deliver positive returns under all market conditions, and preserve the invested capital. Investing in hedge funds can often result in higher long term returns and less risk, than traditional stock and bond investments.

With an estimated 10,000+ hedge funds managing over $2.0 trillion USD, hedge funds have become more and more in demand over the past few years, with no end in sight.

Hedge funds represent an alternative investment class that generally seeks to draw profits from market inefficiencies. They often act on a global scale, and aren’t restricted to just stock investments, which puts an enormous range of markets and financial instruments at their disposal.

There is a wide range of various hedge fund strategies, each with their own characteristics. One feature common to nearly all hedge funds is the concept of “hedging.” Hedging means to reduce risk by investing in certain assets. Different strategies take different approaches on what risks the fund wants to be exposed to, what risks the fund wants to eliminate, and to what extent.

Here are some examples of prominent hedge fund strategies:

Managed Futures
Managed Futures deal with non-stock investments, usually specializing in futures and options. Funds following these strategies are strictly regulated, provide daily liquidity, and are highly transparent, unlike most other hedge fund strategies.

Emerging Markets
Emerging Markets strategies invest in developing markets, which generally tend to have high inflation and volatility. But these developing and emerging markets often have large growth potential.

Equity Hedge or Long-Short Equity
Equity Hedge strategies make use of short and long equity sales to hedge out certain risks in the market. By hedging out unwanted risks, they are able to expose themselves to favourable risks, increasing their profits.

Arbitrage
Arbitrage strategies seek out opportunities to make profits using market inefficiencies, such as buying a stock for 50 € in Paris, and immediately selling it for 51 € in Frankfurt. They also make use of bonds that can be converted into stocks, and take advantage of price mismatches.

Event Driven
Event Driven strategies seek opportunities where a stock’s value is influenced by a significant event, such as bankruptcy or a merger. This generally results in the fund buying a stock extremely cheaply, or selling it when it is extremely expensive.

Global Macro
The Global Macro strategies generally use leverage, derivatives, and other financial instruments in markets across the globe, and seek to generate returns from shifts in global economies.

Hedge funds can also be a fund of other hedge funds, which combines several of these strategies providing further diversification effects.

Hedge funds are non-traditional investments, which give them the potential to have some interesting advantages. Although they vary from fund to fund, these are some characteristics that are typical of hedge funds:

• High diversification potential
• Low market risk
• Stable returns
• Positive annual returns

However, there are some common disadvantages to hedge funds as well. Some drawbacks common to hedge funds are:

• Lack of regulation
• Often restricted to “accredited investors”
• Low liquidity due to withdrawal limitations
• Frequent lack of transparency

Managed futures, one of the hedge fund strategies mentioned above, aren’t subject to many of the disadvantages that normal hedge funds suffer from, but still offer the same advantages and more. Fortunately, Varengold has established itself over the past 15 years as one of Germany’s pioneers in managed futures and as a managed futures expert.