Tetragon Financial Group (AS:TFG) is a specialist closed-ended investment company aiming to provide stable returns across economic and various asset class cycles through investing in a selected portfolio of alternative assets. Within each asset class, the manager seeks to outperform through identifying the most appropriate structure for investments, as well as selecting high-quality specialists to manage the underlying investments. Targeting an annual return of 10-15%, TFG’s NAV total return has substantially outperformed major equity markets and its peers over one, three and five years, and since the fund’s launch in April 2007. Steps are being taken to address a persistently wide discount, which currently substantially enhances the dividend yield on TFG’s shares.
Investment strategy: Selective alternative strategies
Looking to generate distributable income and capital appreciation, TFG’s manager seeks uncorrelated, alpha-generating strategies, aiming to identify asset classes offering excess returns relative to their investment risk. Analysis covers risk/reward, correlation, duration and liquidity of potential investments to gauge their appeal and expected effect on the portfolio. While historically TFG’s primary exposure was to CLOs (see page 15), which made a strong contribution to performance, the portfolio has more recently evolved to comprise a broad range of alternative investments, including a diversified alternative asset management business, and covers bank loans, real estate, equities, credit, convertible bonds and infrastructure.
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