FOR YOUR INVESTMENT
Telesto offers access to investment opportunities that the traditional financial industry doesn’t offer.
Traditional banks are not able to offer those mainly because of scale. Most often those strategies are capital constrained and too small for a traditional institution to dedicate sufficient time, effort and due diligence. More over, the regulatory framework would make it very difficult for them to offer this only to a subset of clients. On the other hand smaller wealth managers don’t have the expertise, network and experience to properly investigate very niche asset classes.
At Telesto fund, our focus and expertise has been only on sourcing & due diligence on those less to non-correlated opportunities for more than a decade.
HOW DO WE
The founding partners spent decades in the financial industry prior to launching this vehicle after concluding that they were not satisfied with the current diversification offerings from the traditional financial industry.
Since 2011, the founders and the investment team have travelled extensively globally to build a strong network and meet managers & specialists in the less crowded private assets space, reviewing hundreds of opportunities and selecting a handful after a rigorous due diligence. For more than 10 years, more than 1,000 funds have been checked, managers met and findings have been collected in the proprietary fund’s database, building up the expertise and connections.
WHAT ARE WE LOOKING FOR?
Our preferred criteria:
WHAT IS TELESTO FUND TODAY?
Our portfolio today is diversified around twenty five different strategies with low to no correlation to the financial markets offering investors real diversification to distinctive economic exposures.
The fund managers behind them have been selected for their excellence after a long due diligence process based on the criteria explained above.
Our portfolio is exposed to various strategies such as the consolidation of the healthcare real estate market, critical educational real estate with long term (20y+) leases, the consolidation of US Postal facilities long term leased by the US Postal Service but also invests in various secured lending strategies and litigation finance. The portfolio is also populated with smaller liquid satellite strategies which also help to diversify and take advantage of smaller short term opportunities.
Although we invest around the globe, we tend to favor opportunities in stable, developed and legally well secured countries like Germany, United Kingdom, United States of America.
Assisted by external operational due diligence experts the team is continuously monitoring the portfolio of strategies for unwanted risks and changing environment.
The objective of Telesto Fund is to generate attractive returns uncorrelated to traditional markets in all market environments, including during times of rising volatility and market stress.
The Fund invests across a range of carefully selected strategies in preferred alternative ‘niche investments’. The fund’s investment objective is to seek low volatility benefitting from a combination of dissociated investment ideas with a target return of 5 to 7% per year on a 3 year investment horizon. The Telesto fund provides exposure to alternative investments similar to the way large Institutions, Family Office and Endowments manage their assets, often allocating between 30-40% of their assets to private/alternative assets.
Combining Telesto Fund and traditional assets classes improves the risk/return metrics of any portfolio by decreasing the level of risk and adding additional return when markets are turning negative.
Private assets are investments that are typically not publicly listed and traded. Because of this, they can often have lower volatility than their public counterparts, offer diversification benefits and uncorrelated returns.
Private assets are a broad range of investment types and opportunities.
As an alternative source of return, private assets can help to diversify investment portfolios and offer potential attractive returns to help meet long-term goals.
A few of the most common private asset investment types are:
Private equity investments are not traded on public markets. Private equity firms usually acquire or invest in private companies with the goal to take them public or sell them for a profit. Because assets from private equity investments are not with a public company, it is considered a private asset.
Real estate assets are usually considered private assets.
Privately managed infrastructure funds are an example of a private asset class. Examples include investments in schools and healthcare facilities.
Private credit is an alternative asset class where investments are made into non-publicly held debt and direct or private lending companies.
Telesto Fund intends to protect your money against inflation. Indeed, alternatives in which it invests provide many options for investors to protect their capital from inflation. Inflation is ultimately caused by too much demand relative to available supply. When that imbalance extends to property markets they can provide a good inflation hedge as rents and capital values increase : a landlord can charge more for rent, which in turn increases their income so it is on pace with the rising inflation. Private debt is also a good hedge, as long as collateral is robust, and based on tangible assets. In that respect, by allocating heavily in private real estate, private debt and other alternative niche, Telesto is adequately positioned to protect your capital against inflation.
Thanks to its significant exposure in private debt, Telesto intends to be resilient in rising rate environments. This for different reasons:
- In a rising rate environment, floating rate loans are highly attractive, as income can rise alongside interest rate increases. Most of Telesto’s private debt allocation is linked to floating rates.
- Privately negotiated deals: Private credit transactions are bilateral in nature and are negotiated directly between the lender and the borrower, the negotiation can include better protection, senior secured structure, covenant, which makes the credit more defensive.
- Less volatility: less volatility is expected in private assets because these assets are not traded in public markets. Private loans have offered relatively low historical volatility, while still maintaining attractive returns, when compared with the public market.
The decentralized nature of alternative fixed income and other alternatives gives them low correlation with the market fluctuations that dictate the performance of traditional asset classes like government bonds or growth stocks. It means they can be particularly effective at maintaining value during periods of high market volatility like pandemic or geopolitical instability. By allocating across a wide spectrum of alternatives, Telesto benefits from the low correlation, while diversifying the economic risks.
“Don’t put all your eggs in one basket” is a proverb that warns against investing all your resources in a single product. If something happens to the basket, you lose all your eggs. When applied to investing, this proverb directly speaks to the value of portfolio diversification. Portfolio diversification is based on the concept of complementarity. By selecting complementary investments, you can decrease a portfolio’s risk profile, regardless of the risk profiles of the investments it comprises. Alternative investments can be a beneficial addition to portfolios due to their high level of complementarity with traditional investments because they tend to have a low correlation with traditional assets. This means that if the stock market is doing poorly, Telesto Fund, which has 25+ different exposures in the alternative asset class, could perform well. Because its investments are separate from the public market, they present a great opportunity to diversify your portfolio. However, due to their relative less liquidity, an investor should always see alternatives as a complement to their traditional (liquid) portfolio and cash, not a replacement.
Telesto is not a Hedge Fund or fund of Hedge Funds.
Hedge funds are actively managed alternative investments that typically use non-traditional and risky investment strategies or asset classes. Hedge Funds are not as strictly regulated as traditional mutual funds. Hedge funds are free to use riskier strategies in riskier ways. Notably, they frequently use leverage. They also invest in derivatives such as options and futures. In short, they are free to choose esoteric investments that conservative investors won’t touch.
The investment approach and risk profile of Telesto Fund is the opposite of what an hedge fund does: when we look at a new opportunity, we focus on mitigated risk (e.g. asset-backed, personal guarantees insured,…) where leverage is limited rather than excessive. We look first at diversifying the economic exposures of the portfolio and the level of correlation to public markets, favoring predictability and cash generation of underlying real assets. Telesto offers better downside protection than hedge funds, with less volatility and correlation. In addition traditionally, Telesto offers the transparency that an investor should want.
Telesto shares some features with the traditional real estate: Telesto focuses on real assets which are generating stable and predictable monthly or annual yields, generally high-occupancy real estate assets (core and core plus) with stable rental income or fixed income (alternatives). However, Telesto only invests in less crowded niche, in fragmented sectors where a consolidation strategy is possible. In such sectors, yields are higher, and underlying assets benefit from long term leases, excellent renewal rate. Telesto also adds a layer of downside protection by investing in assets offering reliable (and often government-guaranteed) cash flows even during recessions.
In addition to a seasoned investment team combining 125 years of experience, Telesto Fund is strictly regulated under the oversight of the Luxembourg regulatory authority (Commission de Surveillance du Secteur Financier), under the full AIFM (Alternative Investment Fund Manager) regime. In accordance with the EU AIFM directive, the Fund has appointed a fully licensed external alternative fund manager, IRE AIFM Hub, that is approved and directly regulated by the CSSF. The AIFM is a member of the IC, and review each investment from a risk management perspective and from a portfolio management perspective. In addition, the Fund has appointed a fund administrator, Alcyon SA, that independently values each investment and release the net assets value of the fund and performs the reconciliation of the cash movements. In addition, our custodian bank, Creand Wealth and Securities, which controls and documents all cash transactions.
Yes, the fund is audited annually. No qualified opinions were issued since inception.
No investment is without risk, individual asset classes carry their own specific risks, including possible loss of principal, and alternative strategies are no exception. In addition to normal market risks, alternative strategies may also carry an enhanced liquidity risk due to their exposure to real assets, which take time to sell and could realise reduced values if needing to be sold quickly. Investors should always have access to cash and other more liquid assets in their portfolios to provide for personal immediate liquidity needs and accept their alternative asset exposure as being a long-term investment.