Investment trust best buys: what investment asks three investment trust specialists to recommend their favourite investment trust shares for a cautious, a balanced and an aggressive investment.(INVESTMENT TRUSTS: MONITOR)

CAUTIOUS OPTION

David Hambidge, investment director, pooled funds, at Premier Asset Management, points cautious investors in the direction of a fund of hedge funds. Dexion Absolute's shares are ranked fourth out of six in the Hedge Fund sector over one year to 31 October 2005. They have returned 9.5 per cent over that period, compared to a sector average of 11.62 per cent.

"The fund of hedge funds area is attracting more attention amongst professional investors, but it's not been an area private investors have got involved in, which is a pity as some of these funds provide an excellent means of diversifying risk," says Hambidge. "Dexion Absolute is a generalist fund with a well-diversified portfolio. It also has an excellent track record, and it has averaged an annual return of 10 per cent."

Hambidge adds that it's a pretty good fund if you're looking for something that will let you sleep at night, but it has a very low correlation with traditional assets. "I wouldn't suggest putting all of your portfolio into this type of investment, but part of it should certainly feature," adds Hambidge. "The one drawback at the moment is that the shares are trading at just under 4 per cent, but it has been as high as 7 per cent. However Dexion Absolute has a pretty good discount control mechanism in place so it is unlikely that it will move to a deep discount in the future."

Contact Dexion Capital on 0207 520 9036 or visit www.dexion capital.com