Australia’s equity-based absolute return funds posted positive performance for investors of 4.51 per cent for the month of July, taking 2009 year-to-date performance to 12.69 per cent,
Australia’s equity-based absolute return funds posted positive performance for investors of 4.51 per cent for the month of July, taking 2009 year-to-date performance to 12.69 per cent, according to Australian Fund Monitors.
This closely matches the ASX200 accumulation index which has returned 14.03 per cent YTD. Over a 12 month period the ASX has still lost 14.73 per cent whilst equity based absolute return funds are down just 1.90 per cent.
Excluding fund of funds, single managers across all strategies and asset classes have returned +1.23 per cent over the past 12 months.
Although there has been a significant improvement in the ASX’s performance since March this year, the accumulated return since January 2004 is +29.86 per cent, after falling to just 2.3 per cent in March this year. By comparison, AFM’s Absolute Return Index, covering over 200 funds managed or available in Australia, has returned 61.51 per cent since January 2004, after touching a low of +45.67 per cent in February 2009.
AFM says the importance of the size of the drawdown is significant: a fall of 40 per cent, suffered by various equity markets in 2008, requires a rebound of 66 per cent before markets regain their previous ‘high water mark’, whereas the 18 per cent fall experienced by the average absolute return fund in 2008 only requires a 22 per cent rebound.
Reviewing managers’ monthly performance reports has revealed a strong view that while they have enjoyed the market’s new found confidence, many are of the opinion that it may have built in more forward earnings improvement that it should have.
AFM says although the general opinion is that we may have seen the worst, few are discounting the possibility that there may be a prolonged period where the market moves broadly sidewards.
Against this the optimists are referring to the weight of money still on the sidelines, and the general feeling of confidence that the world’s economies did not quite fall into the abyss, the report states.
