What is the typical return distribution of a Conservative FoF?

The typical return distribution of a Conservative Fund of Funds (FoF) would generally exhibit characteristics that align most closely with extreme negative skewness and very high kurtosis. This means that the returns may be clustered tightly around a peak (high kurtosis), while also displaying a tail that extends towards the negative side more than the positive side (negative skewness).

In the context of a conservative investment strategy, which aims to minimize risk and protect capital, it's expected that while returns are typically stable and conservative, there may be occasional significant losses that lead to negative skewness. This represents the potential for infrequent but severe downturns, which is a critical risk factor in conservative portfolios. The presence of high kurtosis indicates that even though the returns may be stable most of the time, there are still potential extreme outcomes that investors should be aware of.

Other distribution shapes do not align well with the typical profiles of conservative funds. Symmetrical distributions would suggest a balance of positive and negative outcomes, which does not capture the essential risk dynamics of a conservative strategy. Positive skewness indicates more frequent small losses and the occasional large gain, which does not accurately describe the conservative risk-averse approach. A distribution without a defined shape would lack the specific characteristics that help investors