Absolute returns - a strategy for all seasons?

Is the growing number of absolute return funds a knee-jerk reaction to a fear of relative return products after market volatility? Will absolute return strategies prove their worth in good times as well as bad?

The explosion over the last year or so in the number of retail absolute return funds (£3.9bn under management as at the end of 2008 according to the IMA, and growing rapidly) has led some commentators to suggest this is simply a knee-jerk reaction to investors running scared of traditional relative return products in the face of last year’s unprecedented volatility in equity markets. Is this really the case or will absolute return strategies prove their worth in good times as well as bad over the long term? Are they relevant for all seasons? You could argue that, for some investors, abso...