Hambi, recently appointed senior consultant at Insynergy Investment Management, believes that investors should use absolute return funds to manage downside risk in the face of continued market volatility.
A recent Schroder poll found 69 per cent of intermediaries would invest at least 10 per cent of their clients' assets in absolute return products within two years, an upward trend from the same poll conducted six months ago when half allocated only 5-10 per cent of their portfolios in this sector.
But Hambi said this was a surprisingly low figure: "If anything I thought that this statistic would be higher than 69 per cent. People will have very long memories of this credit crisis. Even if the markets were to improve, I think there will still be a very big appetite for protection. Investors will sacrifice bigger upsides if its means they are protected against downside risks."
"The Insynergy Odey fund is a good example of this. The fund manager Crispin Odey only buy stocks that he believes will make money, and he completely ignores indices."
The fund is in the IMA Global Growth sector, but aims to beat cash in rising and falling markets.
As Financial Express data shows, Odey's fund has outperformed the sector average for both both Absolute Return and Global Growth since it first started in November 2008.
Performance of fund vs sector since launch
Source: Financial Express Analytics
Monica Tepes, fund research manager at Killik agreed that Absolute Return funds were attractive in the current climate: "I expect interest in this sector to continue unless there is an unprecedented market rally. But I can't see this happening. For now, I expect the market to stay volatile, and so for the majority of those on the defensive I think this sector will continue to have a high allocation in their portfolios."
"Very few people are entirely bullish right now. Even those who have made profit in the last six months may be now looking to consolidate."
While Hambi was positive about the sector, he highlighted the potential danger of investing in funds without a proven track record: "Being such a new sector, a lot of investment houses are handling it for the first time, and handling it badly. I feel some of these younger companies are giving Absolute Return a bad name, which is a shame."