Lifting the lid on absolute return

While the story behind absolute-return funds is compelling, returns on target have so far proved elusive for some investors. The answer is more risk - but how? Dan Mannix gives some guidance to the heady world of absolute returns for advisers and investors

What could be more compelling than a fund that offers the investors prospect of steady, positive returns above those on offer from a bank or building society? The marketing story behind absolute-return funds is a compelling one. Unfortunately, it has not been a prestigious start for many of these funds. Standard & Poor's (S&P) reports that none of the funds it reviews have met their return targets. Indeed, many have suffered significant capital losses during the market volatility of the summer, and it seems increasingly likely that they will struggle to make positive returns this year (let...