We use cookies to support features like login and allow trusted media partners to analyse aggregated site usage.
To dismiss this message and allow cookies to be used, please click "Continue".

Continue

Features

Twitter board

Follow us
  • My week on Twitter 🎉: 2 Mentions, 3.3K Mention Reach, 5 Likes, 6 Retweets, 7.76K Retweet Reach. See yours with… https://t.co/IZfviidt4H16 hours ago
  • Friday View: Trustees feel the heat over climate change - bankers' pensions back in black - TPR suspends trustee -… https://t.co/kUKa8QUF9w3 days ago
  • Increased regulatory oversight will be risk-based, TPR keyperson will meet schemes deemed riskier several times a y… https://t.co/wUiKPGESaU5 days ago
  • Lesley Titcomb, TPR chief executive says change is on its way, the regulator will increase oversight between valuat… https://t.co/Wu8Pv6TfqS5 days ago
  • Join us and @AonRetirementUK on the 4th of July at the luxurious Victorian Bath House featuring educational presen… https://t.co/r1abr8Qls06 days ago
  • DWP wants trustees to feel the heat over climate change https://t.co/bs25DvyWGF #ESG #climatechange https://t.co/dZEXB0g8a46 days ago
  • My week on Twitter 🎉: 3 New Followers. See yours with https://t.co/mCw3VcMQGw https://t.co/3kEHNr3xyz7 days ago
  • Friday View: Heathrow's £325 million buy-in - Auto enrolment for the gig economy - Brunel opts for ACS structure -… https://t.co/vsnML1Vzb510 days ago
  • Pimlico Plumbers- Could gig economy workers be auto enrolled? https://t.co/qgrlWxMUW8 #gigeconomy #autoenrolment… https://t.co/wnDH18iPxG10 days ago
  • RT @eVestment: Workers in the #UK are open to increasing their retirement savings and tend to place greater emphasis on workplace #pensions…11 days ago
  • The June issue of portfolio institutional is now out: Featuring our take on #carillion and lessons for trustees as… https://t.co/yC2PNgoaPr12 days ago
  • RT @PensionsSion: Aon's very own John Belgrove shares his views in this piece. Worth reading... https://t.co/VYEJWjAU3z12 days ago
  • My week on Twitter 🎉: 2 Mentions, 3.29K Mention Reach, 2 Retweets, 3.27K Retweet Reach. See yours with… https://t.co/MeoES7Ch3L14 days ago
  • Friday View: South Yorkshire hedges pension risk- Recruitment execs face prison over pension scam - Johnston Press… https://t.co/9fV8Z48WtF17 days ago
  • RT @cfjescott: A recent piece of mine on the @CMAgovUK investigation into investment consultants in @portfolio_inst #investment https://t.c…19 days ago
  • Our ESG Roundtable: Better Long-term outcomes? Available to download now https://t.co/o7T8kWSwWY https://t.co/oHs4VlRK9E21 days ago
  • Active vs Passive : In 2016 investors withdrew around $285bn from active funds and pumped almost $429bn into passiv… https://t.co/tjpxhTxW5Z21 days ago
  • RT @WhtstheDiehlio: .@AitkenRL spoke with @graniteshares CEO Will Rhind about the ongoing active vs. passive debate. Check out their though…21 days ago
  • Green is the new black. A record sum is expected to be raised under the green bond banner this year, but is it doom… https://t.co/JYP8k0ZfZk23 days ago
  • Our Cover Story! Property: Solid Returns - Low gilt yields are forcing schemes to pile into bricks and mortar. Mark… https://t.co/9nyjFp0Z4R23 days ago

Equity

Absolute return: Give me shelter

Absolute return: Give me shelter

Charlotte Moore
Tuesday 17th October 2017

If absolute return funds protect investors from the downturn that some believe is on the horizon, why is the UK’s gold standard fund having such a tough time? Charlotte Moore takes a look.

"For too many investors, the process of selecting the right funds has become a box-ticking exercise

George Cadbury, Gatemore Capital

If there was ever a time to invest in absolute return, it would be now. With equity and bond valuations looking overstretched, many are nervous about an impending market downturn. Absolute return strategies can offer some shelter from the coming storm.

Yet the UK’s most successful absolute return fund – Standard Life’s Global Absolute Return Strategies – has had a torrid year. In early August, the fund reported outflows of £5.6bn for the first six months of this year.

Standard Life’s distribution model means that the institutional outflows could be worse than this data suggests. David Vickers, senior multi-asset portfolio manager at Russell Investments, says: “For many of Standard Life’s retail products, investment into the GARS fund appears to be automatic.”

In other words, Standard Life has a default investment into the GARS fund, irrespective of recent performance. Vickers says: “For the outflows to be so large despite these in-flows is significant given the current investor appetite for the sector.”

The GARS fund’s fall from grace does not, however, reflect a wider rejection of the absolute return concept.

Shoqat Bunglawala, head of global portfolio solutions for EMEA & Asia at Goldman Sachs Asset Management, says: “It makes sense to allocate assets to absolute return funds given the current market conditions.”

Equity valuations are at high levels and interest rates are rising, which presents challenges for investors as they increase the probability of prices falling in both of those key markets Bruce Keith, CEO at InfraHedge, says: “There are public pension plans in the US who say they need to put an investment in place to protect them for when the markets turn down.”

Seasoned investors know that it is a question of when rather than if markets will turn. And markets will overcorrect, because they always do. Keith says: “Financial markets have been on such a run that it’s likely this market downturn will be sooner rather than later.”

Absolute return funds can act as a good way to mitigate this risk. Keith says: “An absolute return fund aims to perform well no matter the market conditions.”

But if absolute return funds can play an important role, why are so many investors turning away from the UK’s gold standard absolute return fund? Is this a broader reflection of investors falling out of love with the absolute return concept?

Page: 1 2 3
0

Leave your comment

View our comments policy

Please login or register with us to leave a comment. It's completely free!

Friday View

Friday View

How investor action helps cut CO2 emissions