Research finds 94% of absolute return funds 'unsuitable'

Financial planner Informed Choice has criticising the bulk of absolute return funds for charging unjustifiably high fees and lacking consistency of returns.

Informed Choice's research found just three funds - equivalent to just 6% of the IMA Absolute Return sector - met its 80% minimum suitability threshold, as judged by a quantitative screening model. The Henderson Credit Alpha fund, the Insight Absolute Insight fund and the Newton Real Return funds scored 92%, 81% and 80% respectively. But the majority of the 51 analysed funds (67%) scored less than half the maximum score. The research focused on ten factors, including annual performance figures, the number of gain and loss years, total expense ratios, quartile rankings and risk metr...