Prospectus (4.96 Mb) - BlackRock International

changes in the capital markets inhibit or eliminate exploitation of the External Investment Advisor’s investment edge, the
Investment Manager will seek to liquidate the particular Fund Investment, subject to the governing documents of such
Fund Investment relating to redemptions or other structural terms of the Fund Investment.
The existence of an investment edge, whether qualitative or quantitative, is not the sole determinant for allocating money
to an External Investment Advisor. Ultimately, the task of managing money lies with people. The Investment Manager
believes that there is no substitute for knowing the people associated with an External Investment Advisor and evaluating
their underlying motivation, commitment, experience and integrity. Additionally, it is important to understand the
accounting, operational and administrative controls which an External Investment Adviser has in place.
The primary emphasis of the evaluation process is to form an opinion of an External Investment Advisor’s investment edge
and personal character and to determine whether these can add value in the form of superior risk-adjusted returns. This
evaluation is conducted by the Investment Manager through on-site visits, analysis of investments and/or discussions with
the investment personnel associated with an External Investment Advisor and by maintaining a dialogue with independent
academic and financial industry specialists worldwide.
In addition, when evaluating External Investment Advisors, there are certain business standards that are sought in each
External Investment Advisor. Generally, the Company will seek to allocate its assets to External Investment Advisors who:
• invest substantial personal assets in the Absolute Return Strategy being pursued on behalf of the Fund Investment or
have significant personal career and financial risk associated with their investment management activities;
• utilise an investment fee that is dependent on investment performance;
• provide annual audited financial statements from an independent public accountant;
• devote their primary business activities to investment management and generate the majority of their business
income from such activities; and
• have specific and relevant experience managing assets.
PORTFOLIO STRUCTURING
General
The Company will seek to allocate its assets primarily to a diversified group of External Investment Advisors. This process
is dynamic, reflecting the Investment Manager’s view on the relative attractiveness of different strategies utilised among
and within the four broad disciplines of ARS in which the Company invests. The allocation process is designed to allow the
Company to maintain the flexibility to redeploy assets as investment opportunities change. The Company’s specific
portfolio composition will be influenced by a number of factors, including, but not limited to, the Company’s investment
guidelines, the Company’s specific terms and conditions and the investment judgment of the portfolio manager assigned
to the Company by the BAA Investment Oversight Committee (the “Investment Committee”). Specific portfolio structuring
decisions are affected by factors such as the availability or capacity constraints of potential Fund Investments, structural
considerations such as the liquidity terms of potential Fund Investments alone or in the aggregate compared to the
Company’s structural characteristics, the level of fees of potential Fund Investments, and other considerations. Such
considerations will most likely result in differences in composition and performance among other investment fund
portfolios or separate accounts managed by the Investment Manager, even when overall investment or performance
objectives are similar.
Affiliated Funds
The Investment Manager and its affiliates act and intend to continue to act as investment manager, general partner,
managing member or in a similar capacity for other investment funds with investment objectives and/or philosophies
similar to that of the Company (the “ARS Affiliated Funds”). In pursuing the Company’s investment objective and in
connection with the Company’s diversification guidelines, the Investment Manager may allocate a portion of the
Company’s capital to direct and indirect investments with such ARS Affiliated Funds.
The Investment Manager may create one or more conduit funds (together with any ARS Affiliated Funds, the “Affiliated
Funds”) through which the Company, certain ARS Affiliated Funds and other accounts managed by the Investment
Manager or its affiliates may invest for the primary purpose of consolidating investments by these accounts into a single
investment in one or more underlying Fund Investments. Although consolidating the assets of the Company and those of
other investment funds and accounts managed by the Investment Manager should provide the Company a certain degree
of efficiency and other potential benefits, there are additional costs and risks associated with an Affiliated Fund or similar
structure. See “Risk Factors — Risks Relating to the Investment Strategy — Investment in conduit entities”.
The Investment Manager and its affiliates manage funds or accounts for Other Clients whose investment objectives and/or
philosophies may overlap, or be complementary to, the investment strategies and/or philosophies pursued by the
Company, and both the Company and Other Clients may be eligible to participate in the same investment opportunities.
Additionally, Fund Investments are generally offered in private offerings and it is not uncommon for Fund Investments to
become closed or limited with respect to new investments due to size constraints or other considerations. Moreover, the
Company or Other Clients may not be eligible or appropriate investors in all potential Fund Investments. As a result of
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