Like looking for a 'needle in a haystack': Why fund selection is key in the absolute return sector

Deep Dive into absolute return

It is very simple. Targeted absolute return funds are meant to protect investors' capital and provide positive returns over reasonable time frames, irrespective of what is happening in stock or bond markets.

The investment objectives of many absolute return funds allow for extended rolling time frames of three or even five years, such that you would need to go back to the ‘proper' bear markets of 2000 to 2002 (the dotcom bust) or 2007 to 2009 (the Global Financial Crisis) for those generous time frames to prove really challenging.  In both those instances, global equity market indices suffered peak-to-trough declines of about 50% over two-and-a-half year periods and did not regain their peaks for more than five years. Since 2009, however, almost continuous support from central banks has m...