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Absolute return for you and your clients.
- Article from:
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Investment Adviser
- Article date:
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May 21, 2007
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Copyright informationCOPYRIGHT 2007 FT Business. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Absolute return has become the latest hot topic in the investment industry and, like many new concepts, it is not always well understood.
At its heart lies a relatively simple goal - the generation of positive returns in all market conditions. This contrasts with, say a traditional relative return equity fund, which might gain 6 per cent one year and then fall 10 per cent the next.
The fundamental idea behind absolute return funds is that they smooth out these fluctuations, giving investors a clearer idea of the returns they might realistically expect.
Of course, simply generating a positive return is not enough to entice most investors. The interest rate on cash ...