Which performance characteristic is associated with the returns of the Strategic FoF?

The choice of modest mean returns with moderate downside risk accurately reflects the typical performance characteristics of Strategic Funds of Funds (FoFs). These types of funds are designed with a strategic approach to allocate capital across various hedge funds and alternative investments, aiming to generate stable returns while managing volatility.

Strategic FoFs often prioritize risk-adjusted performance and diversification over high absolute returns, which makes them more suited for investors seeking stability rather than aggressive growth. The focus on moderate downside risk indicates that these funds manage their exposure to volatile assets, thereby providing a cushion against adverse market movements. This characteristic aligns with their goal of achieving steady, reliable performance over time rather than chasing peak returns accompanied by high fluctuations.

In contrast, the other options imply higher levels of volatility or risk, which are not the primary aim of Strategic FoFs, as they strategically mitigate risks to safeguard investors' capital.