Hedge Funds - A case study on Brummer & Partners Hedge Fund Helios 2xL - A Multi Strategy Fund with Leverage

Abstract

The expression “hedge” can be seen as protection and Alfred Winslow Jones was the one who started the first hedge fund in 1966. He implemented an investment technique by using his knowledge in finding over- and undervalued stocks in a market that he believed to always be inefficient. This has evolved to a creation of a variety of strategies employed today by hedge fund managers. The purpose of this study is to analyze how three variables, multi strategy, leverage and off shore registration affect a specific hedge fund’s performance in comparison to the Swedish hedge fund index (HFXS). The paper was conducted as a case study focusing on Brummer & Partners offshore registered multi strategy fund with leverage, Helios 2xL.The fund is comprised of seven underlying funds that are also Brummer & Partners hedge funds. A pro forma statement from Helios 2xL was used when measuring the funds performance in comparison to the HFXS index, which includes 30 of the larger hedge funds in Sweden. We came to the conclusion that when the three variables multi strategy, leverage and offshore registration were analyzed we clearly saw that they gave Helios 2xL a higher return than the comparison HFXS index. Helios 2xL is currently having an optimal diversification and implementing a dynamic use of leverage, which has shown to be extremely difficult for an investor to conduct on his own. Moreover, being exposed to an offshore environment makes Helios 2xL a competitive fund in the international arena.