Add to this list an eclectic range of differing strategies from the likes of NGAM (H20 Multi-Returns), Odey (CF Odey Absolute Return), and Church House (Tenax Absolute Return Strategies), and the need for extensive due diligence is vital.
Still, absolute return funds continue to prove incredibly popular – the IA’s Targeted Absolute Return Sector was the third best-seller in terms of net retail sales in July, behind Europe Ex UK and UK Equity Income.
This sector on aggregate has also largely performed in line with the expectations, if those expectations are for a slow rising return with minimum downturn – it has returned 17% in five years, versus 57% from the MSCI World. Of course, individual fund performance can vary greatly, depending upon the strategy.
Total funds under management in the sector exceed £50bn. A question I would ask is how many of those retail investors can honestly say they’ve considered ‘mandate fulfilment’ and ‘tail risk’ in choosing those funds?
We’ll be taking a closer look at protecting portfolios against a downturn, and using absolute return funds, in the October edition of Portfolio Adviser, out soon.
