S&P warns on absolute return disparity

Analyst warns investors against seeking magic bullet of absolute returns, with bond funds hit badly in credit crunch

Absolute return funds have continued to show a wide disparity of returns and therefore present a growing misbuying risk, Standard & Poor's has claimed. The agency monitors around 90 Absolute return funds denominated in euros and 10 in sterling, with performance over 2007. It said nearly all the sterling funds were up in calendar 2007, although sterling Libor is considerably higher than Euribor giving them more margin for error, and three outperformed Libor. Analyst Kate Hollis said the performance disparity is partly down to the investment universes, processes and risk limits funds us...