The risk aversion tendancy

absolute return funds

Investors are more risk averse following the bear markets of 2000 to 2003, so absolute return funds are a good option for avoiding falls caused by sticking to the benchmark

Absolute return funds appeal to investors still smarting from losses incurred in the bear market, after their benchmark-hugging fund managers tracked markets downwards in the wake of the technology, media, and telecom (TMT) slump. Such funds promise a low correlation with mainstream assets such as equities and bonds - but at the same time, a positive absolute return. Over the past two decades, real investment returns - adjusted for the effects of inflation - have been high. Global markets have been driven forward by the twin engines of strong economic growth and a trend towards disinflati...