Our absolute return funds aim to achieve a positive return, over the long term, regardless of market conditions. They do this using a strategy of investment and disinvestment, directly and indirectly, in a diversified portfolio of assets.
Our multi-asset fund invests in a wide variety of assets including equities, bonds currencies, property, commodities and private equity.
Meanwhile, our bond fund invests in government, corporate and high yield bonds. Both funds can also invest in cash and use derivatives in order to enhance returns and/or limit downside volatility.
By utilising these investment strategies, there are a number of possible sources of return:
- the market or ‘beta’ return, i.e. the performance of equity, bond or property markets
- the ‘alpha’ return generated by actively managing the allocation between asset classes and markets, i.e. the benefit gained from switching between equity, bond and property markets
- the ‘alpha’ return generated by individual securities, i.e. the performance of stocks in excess of the market
- added value through currency allocation decisions
- the return on cash.
It is the fund manager’s decision as to which of the potential sources of returns represent the best value at any given time and how to structure the fund as a result.
The investment objective of the fund is to achieve a total positive return in all market conditions. However, this is not guaranteed in any way. Investors should note that while managers use derivatives to reduce downside volatility, they could also use them to increase risk. We have developed a detailed and robust risk management process to oversee and manage derivative exposure within the funds and use derivatives with the intention of reducing return volatility. However, we cannot guarantee this outcome and using derivatives may at times lead to increased price volatility. Therefore, investors should be prepared to accept the risks associated with these investments and be aware that their capital is not guaranteed.