Absolute Return: The balanced choice
Investors with an equal priority for returns and risk-protection have been clamouring to put their money into Standard Life’s flagship fund since its 2008 launch.
The five crown-rated Standard Life Global Absolute Return Strategies
fund is a perennially popular Absolute Return product with a strong track record of positive returns and capital protection.
portfolio has returned 28.81 per cent over three years, more than triple that of the IMA Absolute Return sector.
Unlike many of its peers in this much-maligned sector, the fund has produced a positive result in each discrete calendar year since launch, and put on an especially good show in 2009.
AWD Chase de Vere’s Patrick Connolly says it is one of very few funds in the sector that he recommends.
"Its performance shouldn’t shoot the lights out but it should offer a good degree of capital protection," he said.
The portfolio has already attracted close to £11bn in inflows and is almost double the size of the next largest fund in the sector, Newton Real Return.
"If anything it’s too popular," Connolly added. "There’s always a concern when something is so popular because when investors rush into something it often means they’re wrong, but we can’t see anything wrong with it, it’s definitely one we recommend."
Standard Life GARS is a relatively new fund. It was launched in 2008 and according to data from FE Analytics
it underperformed its sector in the stock market slump in that year, before consistently outperforming from 2009 onwards.
Performance of fund since launch vs sector and index
Source: FE Analytics
Connolly says it is unfair to disregard the fund purely because of its short track record.
"Most of the funds in the sector haven’t been going for too long, and even in that period most funds haven’t performed in line with how investors would have expected," he explained.
Investors have to pay a little more for the Standard Life fund: its TER of 1.6 per cent puts it in the sector's second quartile in terms of cost.
Standard Life GARS has the third-highest returns in the IMA Absolute Return sector over three years, behind Henderson Credit Alpha with 38.76 per cent, and CF Odey UK Absolute Return with 67.35 per cent.
Both Henderson Credit Alpha
and CF Odey UK Absolute Return
have produced positive returns in each calendar year since their launch.
However, the Henderson fund is soft-closed, while CF Odey UK Absolute Return has an FE risk score of 82, far higher than the Standard Life fund’s 30.
On a three-year basis Standard Life GARS has an annualised volatility of 5.49 per cent, the 19th-lowest out of 31 in the sector.