In recent years, the fund sub-sector seeing the greatest inflows has easily been multi-asset absolute return, home to several of the largest individual UK funds, writes Jeremy Beckwith.
AIMS Target Return and AIMS Target Income
Finally, AIMS Target Return and AIMS Target Income are the 'younger son and daughter' of the absolute return family.
Target Return was launched in July 2014 and Target Income in November 2014. Euan Munroe, who built the original GARS fund, is now CEO of Aviva Investors and the whole of the business is now centred around providing ideas for the multi-strategy fund range.
Aviva profits climb 13% in H1 as AIM range doubles AUM
The Target Return fund, like the others in the sector seeks positive gross annual returns of cash + 5% over rolling three-year periods. In its objectives and approach, the fund is similar to the SLI and IP offerings.
The Target Income fund, unique within the sector, seeks a pre-tax income return of cash +4% pa paid monthly, while maintaining the capital value after fees, regardless of market performance.
In order to generate the high level of income targeted, a large part of the portfolio has to be invested in high-yielding equities and in bond markets, typically taking on some credit risk. Market hedging, multi-asset ideas and techniques are then added to the portfolio in order to seek to produce an absolute return profile.
Neither fund has yet built a three-year track record . Both performed well from launch until April 2015, but have struggled to make further gains since then.
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