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European AR funds fail to provide downside risk says Fitch

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Amidst the turbulence of recent market conditions, European absolute return funds and multi-asset flexible funds failed to consistently perform and provide sufficient protection against downside ri

Amidst the turbulence of recent market conditions, European absolute return funds and multi-asset flexible funds failed to consistently perform and provide sufficient protection against downside risk according to Fitch Ratings, reported Citywire Global this week. YTD, AR funds have returned -3.5 per cent, and multi-asset funds -8.9 per cent respectively said Fitch. In the first three weeks of August alone, European AR funds lost -2.5 per cent. Multi-asset funds lost an unwelcome -7.6 per cent. Fitch said that whilst flexible funds had avoided 70 per cent of the market decline last month, only half of them had outperformed a balanced bond and equity allocation YTD, adding: “Not all funds in the top quartile of European AR funds have managed to preserve capital year-to-date.” Fitch’s senior director, Manuel Arrive (pictured), believes that the worst performers are likely to be “driven out of the market”, such is the scale of losses. This is yet another example of investors and managers alike facing gale force headwinds in a bid to find alpha-generating opportunities. 2011 is proving to be an unforgiving year across product.   

 

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