Why doesn the Fund employ derivatives and utilize more leverage?
We are prohibited from using derivatives and we have self-imposed (and mandated by the Offering Memorandum) restrictions on our use of leverage. While very bright people can and do make effective use of large amounts of leverage and complicated derivative strategies, it is interesting to observe that the hedge funds that “self-implode” tend to be voracious consumers of these tools. Furthermore, we have no past expertise in derivatives or in strategies that involve borrowing large amounts. Finally, our relatively large position concentration at the top end of the Fund gives us plenty of “zing” (obviating the need for leverage) in our results.
