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Investors look to Absolute Return for diversification

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Over seven in ten investors (72%) say they are inclined to consider Absolute Return funds as part of their overall asset allocation, given the market conditions observed so far in 2022 and the increased correlation between the traditional asset classes of equities and fixed income.

The findings, from a survey commissioned by Fulcrum Asset Management, point to an increasing interest in the asset class. Four in five (80%) respondents said they already had some Absolute Return exposure, and when asked about their asset allocation intentions over the next six months 70% said they planned to either increase exposure to Absolute Return, or keep allocations to this asset class the same.
While investors seemed to be inclined to allocate to the asset class, views and attitudes on Absolute Return were still varied with similar amounts of investors saying they were broadly positive (35%), compared to 34% who held broadly negative views. The remaining 30% were unsure, and encouragingly of these, the vast majority (71%) said that they were keen to learn more.
Reasons for liking the asset class, given by investors who were positive on it included the fact that it is a good diversifier in a portfolio (81%); and it is looking increasingly attractive in the current market conditions (61%).
Of those who were less favourable, 63% cited that the strategies can be too closely correlated to Equities, and 54% perceived their fee structures were complex and might not represent good value. Just over half of those less positive on the asset class, 51% said that they haven’t always delivered on what they promised.

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