From humble beginnings, the retail absolute return fund space has grown in stature and complexity with the funds now bedrock for many private client portfolios.
The £20bn Standard Life GARS Fund and £2.7bn Ignis Absolute Return Global Bond Fund are two of the largest and sophisticated products in the retail space, but what is it that makes them work, who runs them, and in which market conditions will they perform best and worst?
While there are many differences between the two strategies, the most significant is the asset classes and strategies that the funds invest in.
“While GARS consciously allocates to a wide variety of assets and strategies, the Ignis fund is a much more traditional discretionary global macro portfolio focused on government bonds and currency,” says Dan Kemp, partner at Albemarle Street Partners.
“Although GARS has the broader opportunity set, the focus and specialisation of the Ignis team helps a portfolio manager more clearly position the fund within a portfolio. In contrast, investors in GARS must less able to position the fund. It therefore typically resides in a generic absolute return section of the portfolio.
“As a consequence, portfolio managers are buying an expected return stream rather than asset or strategy exposure. This means that it is more difficult for a portfolio manager to continue holding GARS in the event of poor performance.”
Click here for our run through of everything you need to know about these multi-billion pound strategies.
