Fitch: Absolute Return UCITS funds prone to mis-selling

Raings agency Fitch has branded European Absolute Return (AR) funds "prone to performace disappointment" and "mis-selling" to unsophisticated investors.

Fitch's damning indictment of the sector comes with a warning of the need for investors to understand this "fast growing and sophisticated segment of the market". The European AR fund market, as defined by Lipper categories, has grown by 80% since January 2009 to €140bn in assets under management (AUM) at March 2011, thereby passing the peak of 2007, according to Fitch's analysis. Fitch forecasts the sector will continue to grow, driven by sales rather than performance. AR funds aim for positive total returns on a consistent basis, irrespective of market conditions over the medium ...