News & analysis delivered directly to your inbox Domiciled in Luxembourg, the fund predominantly invests in corporate bonds. It typically invests in large-cap companies including those in the FTSE 100 index and aims to deliver absolute returns in any market conditions in a rolling 12 months. The Global Targeted Returns Fund (Invesco) seeks to deliver long-term capital growth with a low tolerance for capital loss. Funds managed with the aim of achieving positive returns in any market conditions, but returns are not guaranteed. But that was £600m lower than in the same month last year. Launched in 2015, it follows the three-month Libor benchmark and aims to target absolute return over the medium term with a volatility target of 10 per cent. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership. A look at performance of funds in the Targeted Absolute Return sector tells very different stories across the board. Additionally, the underlying assets of these funds generally use complex hedging techniques through the use of derivative products, which can carry additional risks which may not be immediately apparent. Nine targeted absolute return funds to watch By Portfolio Adviser , 18 Feb 15 Morningstar co-head of investment consulting and portfolio management Dan Kemp gives his take on funds within the targeted absolute return sector The IA’s Targeted Absolute Return sector definition. It uses derivatives “where appropriate”. Individual funds have varying objectives and the IA acknowledges a “wide expectation” among consumers and advisers that funds will aim to produce positive returns after each year, but it is not that simple. Money Marketing Events Absolute return refers to the amount of funds that an investment has earned. "My view is that if a client cannot take some years of negative returns then they shouldn’t be in the market. With many heavily underperforming after months – if not years – of Brexit woes, a lot of funds have taken a hit when it comes to returns. © 2019 Metropolis Group Holdings Limited and / or its subsidiaries and licensors. I would suggest that 2018 was the perfect year to test out the varied and many promises of targeted absolute returns funds. The Invesco Global Targeted Returns Fund (UK) is a highly diversified multi asset product that brings together a range of investment ideas with the aim of delivering targeted, long-term performance. Sign up today and make your voice heard. The IA Global sector continued to prop up the rest, attracting net inflows of £971m. Providing trusted insight for professional advisers. Managers can invest anywhere and in any assets, so funds in this sector are all very different and should be looked at individually. Browse Targeted Absolute Return Investment fund factsheets. All rights reserved. More information can be found in our Privacy Policy. Investors pulled £501m from the Targeted Absolute Return fund sector in April, making it the least popular asset class with UK investors in the month. "A lot of the time with these absolute return funds, you have to google what it is they are investing in, and I don’t like that. Click on the link marked 'Targeted Absolute Return Fund – … Man GLG Alpha Select AlternativePerformance over five years: 39.06 per centFund size: £1.08bnManagers: Charles Long and Nick JudgeBenchmark: FTSE All-ShareLaunched: February 2010About: This fund uses long and short investments mainly in the UK equity market or from issuers that derive a large part of their revenues from the UK. These funds aim to deliver positive returns in all market conditions, with low volatility, although returns are not guaranteed. One of the oldest investment management firms in the US, Eaton Vance may not be as well known as many of its US counterparts but performance of this fund speaks volumes. The Investment Association Targeted Absolute Return sector has been one of the top sectors for investment inflows over the past few years, primarily driven by retiring baby boomers and pension freedom reforms implemented in 2015. Have your say The timeframe must not be more than three years. All of our funds have an absolute return objective. Absolute return funds have been subject to debate by many in the industry over the years, with the sector definition, the name and comparison of the sector being some of the key issues. Within that the most bought sector was Strategic Bond, which had £859m of net inflows. JPM Global Macro OpportunitiesPerformance over five years: 39.60 per centFund size: £1.46bnManager: Shrenick ShahBenchmark: Libor GBP 1-monthLaunched: February 2013About: Seeking returns over a three-year period in all market conditions, this fund invests in global securities in fixed income and equities. The two of Sanditon funds are set to be transferred to CRUX […]. Managed by an experienced team free to invest in ideas without asset class constraints, the fund targets a 5% gross return per annum above UK 3-month LIBOR over a rolling, three-year period. The sector has been blighted by poor performance in recent times, having lost more than 2 per cent in 2018, and returned 3 per cent over the past three years to June 6. This allows the IA and investors to distinguish between funds by timeframe. The fund uses a broad range of investment ideas based on advanced derivative techniques to gain exposure to a selection of assets across all economic sectors worldwide. The Targeted Absolute Return sector can be difficult to understand. It uses positions in sovereign asset classes such as foreign currencies and sovereign credit markets. Research and insight McDonald: Well, it sounds straightforward, but an absolute return fund is a fund that seeks to make a positive absolute return for investors, so essentially to make money. The fund may also invest in other transferable securities, other funds and cash or cash like investments. Take part in and see the results of Money Marketing's flagship investigations into industry trends. According to FE data, the fund currently has 75 per cent in international equities, 39.6 per cent of which are in North America. This may include using derivatives to create the effect of a short sale. Our website uses cookies to improve your user experience. It would then publish on its website the number of times during the timeframe when the fund outperformed. Administrators from Smith and Williamson, the firm handling the London Capital and Finance collapse, have been brought in to deal with the demise of Reyker Securities. Why private equity firms are buying platforms, What the rise of fiscal stimulus means for advisers, How VCT managers are preparing for life after the pandemic, Jupiter loses US trust as Siddles retires. Using a top-down investment process that combines a search for relative value with diversification across asset classes, markets, strategies and investment horizons, its objective is to outperform the one-month Libor by 4 per cent per annum over its recommended investment horizon of three years. Absolute return is simply whatever an asset or portfolio returned over a certain period. Reyker Securities in ‘special administration’ Mark Ford, Adam Stephens […], Disruptors, led by the tech sector, are steadily making their way in to the market after years of slow progress, The board of Sanditon Asset Management decided to wind down the company, and retire as managers of its funds. They often promise you lower risk than equity funds with better returns than the likes of cash and a low correlation to broader markets – especially when they fall. The fund invests in an array of markets, but the majority of assets sit in global fixed income. !function(e,i,n,s){var t="InfogramEmbeds",d=e.getElementsByTagName("script")[0];if(window[t]&&window[t].initialized)window[t].process&&window[t].process();else if(!e.getElementById(n)){var o=e.createElement("script");o.async=1,o.id=n,o.src="https://e.infogram.com/js/dist/embed-loader-min.js",d.parentNode.insertBefore(o,d)}}(document,0,"infogram-async"); The IA has a specific Targeted Absolute Return monitoring process, using up to 24 data points, depending on when the fund launched, and for newer releases funds are monitored over the available period. Overall, investors pushed a net of £2.2bn into UK open-ended funds in April. Copyright © 2019 EMAP Publishing Limited, Registered in England and Wales with number 06439194 Iain Stewart is … Despite the fall in sales, it remains the sixth-largest sector by funds under management, with £59.1bn in assets at July 2019. And a targeted absolute return fund is one that aims to make a positive return, a fund that aims to make money come what may. The decision follows the board’s view that the company is “unlikely to grow profitably over the next few years,” according to Sanditon chief executive. Be the first to hear about our industry leading conferences, awards, roundtables and more. Vincent Chailley, CIO of H2O Asset Management, discusses the key investment factors in 2016, including volatility, the disconnection between central banks and its implications on markets, as well as opportunities that may exist for investors. Hyde-Smith is co-manager of the Waverton Absolute Return fund, which is a fund-of-funds product that builds its portfolio from other absolute return strategies. Funds may aim to achieve a return that is more demanding than a ‘greater than zero after fees objective’. Seeking solid returns in a turbulent market. For example, if a fund launched in January 2016, the IA would monitor from January 2016 to January 2017, then February 2016 to February 2017 and so on for 24 12-month periods. Absolute return, or just return, is the percentage gain (appreciation) or loss (depreciation) that an asset has achieved over a particular period of time. It is, however, the overarching goal of funds that aim to achieve an ‘absolute return’. James Clunie’s Jupiter Absolute Return fund, which started the year at £1.2bn, is now down to a measly £180.4m after being pummelled by £791.9m of redemptions and poor performance. The adjective "absolute" is used to stress the distinction with the relative return measures often used by long-only stock funds that are not allowed to take part in short selling.. Funds must clearly state their objective and timeframe in which they aim to meet, so investors can distinguish between funds classified to the sector. Behind Gars, the BNY Mellon Real Return and Aviva Investors Multi-Strategy Target Return funds have leaked around £990m and £955m respectively. Head of the macro strategies team at JP Morgan, manager Shah has been with the group for nine years. © The Financial Times Ltd 2020 "FT", "Financial Times" and "FTAdviser" are trademarks of The Financial Times Limited and their associated companies. To be clear, this doesn’t mean these funds are bad. The Investment Association says funds within the sector aim to deliver positive returns “in any market condition” but, despite the name, returns are not guaranteed. These include mixed asset funds, global bond funds, multi-strategy vehicles and long/ short vehicles to name but a few. The best performer is the Natixis H2O MultiReturns fund. The hedge fund business is defined by absolute returns. As the voice of the adviser community, our content generates robust debate. FILTER FUNDS ... TWENTYFOUR ABSOLUTE RETURN CREDIT G GBP Inc. 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