What is a key feature of the Strategic FoF?

The choice of investment in emerging markets and sector strategies as a key feature of a Strategic Fund of Funds (FoF) is correct because Strategic FoFs are designed to achieve specific investment objectives by taking advantage of diverse opportunities across different markets and sectors. Unlike other types of FoFs, which may focus on hedging or risk mitigation, Strategic FoFs actively allocate assets to specific segments where they anticipate favorable returns, including emerging markets and sector-specific strategies. This allows them to benefit from growth in various economic environments and capitalize on unique market dynamics.

In contrast, the other options focus on characteristics that do not represent the strategic approach typical of these funds. Exposure primarily to distressed debt indicates a focus on a specific asset class that is not characteristic of the broader strategy employed by Strategic FoFs. High return volatility suggests a riskier strategy, which might not align with the more calculated investments found in a Strategic FoF. Lastly, a negative correlation with equities typically pertains to funds that prioritize risk management through diversification, which does not encapsulate the essence of a Strategic FoF's proactive investment philosophy. Thus, the emphasis on diverse investments, including emerging markets and sectors, accurately reflects the fundamental strategy of a Strategic Fund of Funds.