Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
A Lesson About Gold – How Bullish Can It Be? - 24th Jan 20
Stock Market January 2018 Repeats in 2020 – Yikes! - 24th Jan 20
Gold Report from the Two Besieged Cities - 24th Jan 20
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Investments and Life Pension Absolute Return Funds Failing to Live up to Expectations

Personal_Finance / Pensions & Retirement Jul 15, 2009 - 10:59 AM GMT

By: MoneyFacts

Personal_Finance

Best Financial Markets Analysis ArticleAbsolute return funds may have proved a popular choice for many investors during the recent stock market troubles, but the latest survey from Investment Life & Pensions Moneyfacts has raised concerns whether they have been delivering on their promise to produce positive returns each year.


Falling short

Although the survey found that the average absolute return fund has delivered positive returns in each of the last three years, there are a worrying number of funds that have fallen short of their objectives.  As Table 1 below shows, only 12 of the 20 funds with at least a one year history are in positive territory with regards to their underlying performance over that time, while the number drops to just eight when charges are taken into account.

Of considerable concern, however, will be the extent to which some of the funds have missed their goal. Those entrusting £1K into the worst performing absolute return fund a year ago will have seen their investment slump in value to £746. If the same investment had been made two years ago, it would now be worth just £683.

Table 1: Absolute return fund performance over one year

Source: Lipper Hindsight. Cumulative performance: Figures based on £1K lump sum investment as
at 15 June 2009, total return, UK net, apply initial charges.  Discrete performance: Figures to 15 June, total return,
UK net, no initial charges. Figures in brackets show number of funds available over each term.  

Richard Eagling, Editor of Investment Life & Pensions Moneyfacts, said: “Digging a little deeper, the reason behind the disparity in performance becomes apparent: the approaches that absolute return funds adopt in attempting to achieve their goal vary considerably. Indeed, the majority of funds that reside under the absolute return umbrella have differing benchmarks, risk characteristics and timeframes for delivering performance. Some funds invest only in UK equities, while others are restricted to European equities or maybe global bonds.”

Despite notable disappointments, there are still some encouraging signs for the absolute return sector. The undoubted success story of the sector is the CF Octopus Partner (Absolute Return) fund having posted growth of 51.74%, or a return of £1,442 on a £1K investment made a year earlier, taking into account the impact of charges. It is also the second best performing unit trust/OEIC fund overall over the last 12 months, second only to Neptune’s Japan Opportunities fund.

Also deserving of a mention is the Insight Absolute Currency fund which is ranked 18th in the entire fund universe, returning £1,148 after charges over the last year, and Threadneedle’s Absolute Return Bond which comes in at 23rd with a return of £1,130.

Impressively, 17 of the 20 funds that have been around long enough to have one year performance figures feature in the top quartile of the past year’s best unit trust/OEIC performers. Meanwhile, in terms of the sector overall, an average return of 2.74% (without charges) means absolute return is the third best performing sector of the past year, comparing favourably with an average 15% loss across all funds. Taking into account charges, the average absolute return fund has lost just £4 on an initial £1K investment over that period, while the average fund overall has lost £187 in that time.

Richard Eagling concluded: “With many funds still in their infancy, it is perhaps too early and a little unfair to pass a conclusive judgement on many of the funds. It is also worth bearing in mind is that no investment vehicle can guarantee a positive return. However, given this is the overriding aim of all absolute return funds, that so many have fallen so far short of the mark is somewhat of a surprise. "

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules