FSA calls for better risk warnings on Absolute Return funds

The Financial Services Authority (FSA) is planning to force fund groups to improve risk warnings on absolute return funds next year after warning consumers are in danger of being misled.

In its latest quarterly consultation paper, the regulator said there was a chance funds with 'absolute' or 'total' return in the name could convince consumers they were getting a guarantee of positive returns. It said: "A number of funds currently employ descriptions in their fund name, investment objectives or fund literature that can imply a degree of capital protection or a guarantee of positive returns, where no such guarantee may exist. Descriptions and names of this type include the terms ‘absolute return' and ‘total return'. "Consumers could suffer significant unexpected financ...