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It's important to be open to new investment products that could help you boost your portfolio.

I came across an interesting one recently --

Dexion Absolute Limited


, a closed-end fund that is an actively managed fund of hedge funds, traded in London but also available in the U.S.

Dexion Absolute's goal is to offer a steady return, regardless of what the stock market is doing. This should mean that during bear markets it would outperform -- but during a strong bull market, a fund like this would lag.

As of March 1, Dexion Absolute allocated 34% to long/short, 21% multistrategy opportunistic, 12% hedged and 11% each to long/short credit, activist and macro. In all, the fund used 52 managers as of that date.

The allocation can be changed at any time by the decision-makers running the fund. The nature of how the fund reports is that information about the allocation may always be a month, or more, behind.

The difficult part for most investors (me included) to come to grips with: Buying a fund like this amounts to a bet that DXALF's managers will do a good job of selecting successful managers and allocating to the "right" strategies based on where we are in the stock-market cycle.

There is no forward-looking analysis that can be done by an investor buying the fund.

Indeed, the fund's Web site has a page that discusses investment processes. It is quite vague, but really, that is what a potential investor should want. Too many constraints risks impeding returns at some point in the future. I would think an investor would want the managers to do whatever they think is best.

Anyone buying Dexion Absolute is going to pay for the effort. Remember, the fund delves into the realm of hedge funds -- and, while not quite "2 and 20" (normal hedge fund compensation is a 2% management fee plus 20% of the profits), it is expensive.

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Actually, getting fee information is quite difficult. Based on the 2007 interim report, the fund charged a 9% performance fee for the last two years, which is very hefty for a closed-end fund but reasonable for a fund of hedge funds.

Also, since DXALF is a closed-end fund, you need to pay attention to whether the fund is at a meaningful discount or premium to net asset value. Dexion Absolute's most recent data show it trading at a 0.49% discount.

As you have gleaned, this concept, like all investment products, has pluses and minuses. The chart shows that the fund avoided most of the

S&P 500

rollover of the last six months, save for the last few weeks. It is interesting that it started rolling over after stocks stabilized somewhat, but that during the declines of January and most of February the fund was steady.

I'd guess that the reasons for the fund rolling over include the lift in financials (dead-cat bounce or otherwise) hurting long/short equities, and increased volatility in credit spreads hurting fixed-income strategies, but there is no way to know. There also is no way to know whether it will keep heading down.

Anyone interested in this sort of fund needs to think small and realize they are adding something that is unlikely to go up a lot. The fund is successful, in that it has done well most of the time and it garnered some interest with average volume of 1.4 million shares per day.

There are other similar funds that are not available to U.S. investors, but if Dexion Absolute can regain the path it was on a few months ago, it will attract more investors to the fund and more funds to the space.

At the time of publication, Nusbaum had no positions in the funds mentioned, although positions may change at any time.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback;

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