Aberdeen Standard Life has defended the performance and aims of its flagship Global Absolute Return Strategy (Gars) fund.
Investors in the £22bn absolute return fund have endured a period of torrid performance.
The fund lost 2.68 per cent in 2016, placing it in the bottom quartile of the absolute return sector for the year.
It has also underperformed the sector over three years.
That period of underperformance has coincided with a flight of capital from the fund. In September, analysts from RBC said the Gars strategy had seen net outflows of more than £6bn in 2017.
In light of the dire numbers, some have suggested Standard Life has tweaked the information it provides to investors online to flatter its targets for Gars.
Alan Miller, founder of SCM, a wealth management company that also manages an absolute return fund, has written to the Financial Conduct Authority with concerns that changes to the fund's promotional material which now include its six-month benchmark as well as the longer-term aim, could present a misleading picture of performance.
Aberdeen Standard Life has strongly denied the claim, saying the move was to improve transparency for investors about how the fund is doing.
"The inclusion of this additional information in our current fact sheets is so that clients will have a consistent experience with comparable products in the market," they said.
But a spokesman confirmed that while the updated promotional material now draws attention to the shorter term performance, the aim of the fund is to achieve a return of 5 per cent more than Libor on a rolling three-year basis, rather than against short-term benchmarks.
The FCA declined to comment on Mr Miller's concerns. But in its final report on its Asset Management study, published in June, the regulator warned fund groups it continues to harbour concerns about the "potentially misleading" performance reporting used for absolute return strategies, suggesting the products are ripe for an overhaul.
The regulator said it was "still concerned" about how fund firms report absolute return fund performance, as well as a broader disparity of approach from such products.
Mr Miller said he believes Gars and other such strategies are a "ludicrous" investment because of the vehicle's "unrealistic aims".
“We are always astonished how much money goes into the Targeted Absolute Return sector, which has been perennially characterised by woeful performance and ridiculous fees often sold on totally unrealistic expectations to clients.
"For example, the giant Standard Life Gars fund ‘aims to provide positive investment returns in all market conditions over the medium to long term’.
"We believe such an aim to be totally unrealistic, as how can anybody know in advance what all future market conditions might be?"
The phrase “all market conditions” appears in the promotional material for Standard Life's Gars fund.
Mr Miller said the aim of absolute return funds to achieve low volatility means performance is often foresaken.