Investment Philosophy and Process

Aetos Capital combines excellence in research, risk management, manager due diligence, and portfolio construction to increase the probability of consistent and uncorrelated investment results. We believe in a disciplined and fundamentally based investment process where risk management is integrated into all aspects of the investment process and evaluated in each of its four constituent parts – portfolio management, operational, portfolio and strategy risk.

Our meticulous manager selection process reflects nearly three decades of collective fund of hedge funds experience, which is combined with our deep capital markets expertise. At Aetos Capital, we:

• maintain a bias towards fundamentally oriented managers and complement experienced and established firms with emerging talent
• focus on managers with demonstrated investment and business skill, deep organizations, sustainable performance and consistent risk profiles
• determine the allocation to hedge fund strategies and managers by merging quantitative and qualitative factors, using mean-variance optimization tools, reviewing correlations among managers and incorporating position limits, ranges and liquidity constraints
• invest with managers who provide portfolio information and access to principals, affording a clear understanding of each manager’s investment strategy, competitive advantage, and underlying drivers of return
• adjust asset allocations among absolute return strategies within our portfolios based upon our evaluation of the market environment, opportunity set and risk profile of each strategy
• perform ongoing due diligence on the individual managers

Aetos Capital’s portfolio construction process is flexible and is designed to accommodate client-specific return and volatility targets. We offer a tailored range of services including asset allocation analysis, manager selection, program monitoring, direct investment with underlying managers, and custom reporting.

Aetos Capital offers SEC-registered 1940 Act commingled fund of hedge funds*, separate account management, and portable alpha programs utilizing fund of hedge funds.

*Absolute return investing involves substantial risks, including risk of loss of invested capital. Absolute return investments are typically made through investments in illiquid, unregulated investment funds that employ sophisticated investment techniques, often involving derivatives and leverage, in a wide range of financial instruments and markets. These investments entail a wide variety of risks, which remain substantial notwithstanding the risk management practices we employ in selecting and monitoring funds we invest in. Prospective investors should consider these risks and the charges and expenses of the funds carefully before investing. The prospectus contains this and other information: a free copy of the prospectus may be obtained by calling 212-201-2540. Please read the prospectus carefully before investing.

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