Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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