Your IndustryMay 12 2016

Guide to Absolute Return funds

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CPD
Approx.60min

    Guide to Absolute Return funds

      pfs-logo
      cisi-logo
      CPD
      Approx.60min
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      Introduction

      By Simoney Kyriakou
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      Over the past few months, absolute return funds have been storming ahead in the Investment Association’s charts.

      Money has been coming out of standard equity funds and into absolute return funds - but why have retail investors made this move?

      Despite their apparent popularity, absolute return as a concept can be more complicated to explain to clients, with some managers using shorting, contracts for difference and other financial instruments to diversify the risk and create a portfolio which aims to perform differently to any given index or its peer group.

      Add to this the fact many absolute return funds have no benchmark against which to gauge performance - with some simply intending to outperform cash - and it is understandable how explaining what they do and how they work can be difficult.

      This guide aims to explore why such funds are popular, whether they are more expensive, why one cannot make direct comparisons and how you can highlight the various risks and rewards of using absolute return.

      Contributors include: Gavin Haynes, managing director of Whitechurch; Gina Miller, founding partner of SCM Private; Adrian Lowcock, head of investing for Axa Wealth; Alex Hogan, press and digital media officer for the Investment Association; Randal Goldsmith, senior analyst for Morningstar’s manager research team; James Crossley, head of retail distribution for Jupiter Fund Management; and Steve Kenny, director of wholesale business for Kames.

      In this guide

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