Absolute Returns – A Marketer's Dream?

Absolute return promises – easy to make, but hard to keep.

“Do not expect high returns without high risk.

Do not expect safety without correspondingly low returns.”  — William Bernstein, “The Four Pillars of Investing” (2002)

The promise of generating stable returns in both up and down markets feels like an attractive strategy for investors to adopt, and ‘absolute return’ funds have certainly attracted large sums of cash since the credit crisis. Yet the reality of being able to deliver on this promise is far from convincing: strategies are varied, complex and hard to compare; fees are high, relative to sensible alternatives; and correlations to underlying assets – such as equities and bonds – are higher than might be expected. A surprising...