Absolute return? Sales of funds in this sector went through the roof in April, according to the IMA, so I can’t be the only one feeling slightly nervous.
Newton Real Return is an obvious choice, perhaps, with the fund having easily beaten its Libor benchmark and the sector average (though with more volatility) over the past five years. Recent weeks have been more brutal though.
One reason I like the fund is that I agree with Iain Stewart’s view that quantitative easing has made financial asset prices “disconnected from their underlying fundamental values”, while his recently stated goal to increase liquidity in the portfolio is a prudent approach I favour.
Interestingly, as FE Trustnet data shows, the best performers in this space over three years – in terms of returns at least – tend to be the most volatile, including CF Odey Absolute Return, City Financial Absolute Equity, FP Argonaut Absolute Return and Schroder Absolute UK Dynamic.
The Odey fund, run by James Hanbury and Jamie Grimston, is the star performer over that period (136% over five years to end of May).
Crispin Odey himself is among those to have become increasingly bearish in recent months, and his performance has suffered as a consequence.
Another bear, Sebastian Lyon of Troy Trojan was recently among in Chelsea Financial Services’ DropZone of consistent underperformers, perhaps a sign that taking risk off the table may well be one of the riskiest things investors can do right now. There are no safe havens.
So where should I put my money? Is it time to take a gamble into more risky asset classes instead?
An executive decision has been made by the SHAM board to sit tight right now, keep the dragons at bay and let the story unfold. The intrigue has only just begun though. Stay tuned for more SHAM before it gets slain…
Follow @SHAMinvestor for updates.
