Ruffer Absolute Return
"With a much more volatile world, investors are demanding that managers focus on making a real return rather than a relative return, as you can’t ‘eat’ a relative return when markets are down," Rowan Dartington’s Tim Cockerill said.
Performance of fund vs index since June 2007
Source: FE Analytics
He added that an absolute return isn’t possible day in, day out, so a time-frame has to be agreed and accepted. For instance, over five years the FTSE 100 has risen by a meagre 3.5 per cent, so a deposit account has returned more. The IMA All Companies sector has lost 0.5 per cent over this period.
Cockerill picked out Ruffer Absolute Return as one of the best funds to launch in the past half a decade. The vehicle aims to return twice as much as cash at a low volatility, and has certainly achieved that since its launch. The fund, which has an FE Risk Score of 35, has returned 56 per cent over the past five years, compared with a loss of more than 10 per cent from the FTSE 100.
Our FTSE Cash on Deposit data only goes back as far as June 2007, but the index has returned 5.52 since then.
Schroder Asian Income Maximiser
"For all the turbulence in the economy and the stock market, there has still been a considerable number of fund launches in the past five years," AWD Chase de Vere’s Patrick Connolly said.
"These often come in waves as certain sectors become more popular. When emerging markets was being hyped, we saw an increase in fund launches and variations on this theme, including more specialist country-specific funds such as China or India."
He added that many investors have taken a cautious approach during the period and as a result there has been an increase in the number of multi-asset, absolute return and strategic bond funds launched, and high demand for these funds from investors.
All of these types of funds can have a place in a diversified investment portfolio. The problem for the investor is working out the wheat from the chaff, and that is even more difficult for funds that have no track record.
"We don’t tend to invest in funds until they’ve got a three-year record, but one exception to this is Schroder Asian Income Maximiser which was launched in June 2010. This offered an approach that wasn't available elsewhere and an opportunity for some clients to boost their income," Connolly added.
M&G Cautious Multi Asset
Connolly also points to M&G Cautious Multi Asset, run by Juan Nevado and Tony Finding, which was launched in February 2007.
"This provides a good option for those lower-risk investors looking for an all-in-one solution," he said.
Insight Absolute UK Equity Market Neutral
AFH Group’s Graham Toone pointed to the £648.7m Insight Absolute UK Equity Market Neutral fund, which aims to beat LIBID, the bid rate that banks are willing to pay for eurocurrency.
Performance of fund vs benchmark and sector since launch
Source: FE Analytics
Since launch, the fund has returned 25.5 per cent.
Jupiter Absolute Return
Toone also favours Jupiter’s £651m Absolute Return fund, run by FE Alpha Manager Philip Gibbs. With an FE Risk Score of 34, the fund has returned 0.4 per cent since its launch.
Performance of fund vs benchmark and sector since launch
Source: FE Analytics
The fund’s performance demonstrates the problem with many absolute return funds; it is fairly volatile and lost a lot of money during the market volatility earlier this year.