The centrepiece of Northwater's investment offerings since 1994 is its market-neutral fund of hedge funds. In this investment strategy Northwater seeks to identify hedge funds that are substantially market-neutral, have low correlations with other funds, and have a reasonable expected return on a risk-adjusted basis. The objective is to deliver consistent returns with low volatility. Northwater's fund of hedge funds investment committee actively manages the portfolio using a top-down strategy allocation approach and looks for promising new strategies that offer attractive returns. The committee's allocation decisions are based on a bottom-up manager sourcing process undertaken by strategy specialists that look for the best hedge fund managers globally. Diversification, both at the strategy and manager level, seeks to minimize risks in extreme events. The resulting portfolios are structured with the objective of producing consistent and sustainable risk-adjusted returns. Northwater targets a return of 3% to 5% over LIBOR per annum with a volatility of less than 3%. Clients can invest in Northwater's fund of hedge fund portfolios as a stand-alone investment or as a source of potential alpha when combined with an exposure to any equity or bond index in a portable alpha structure.