FCA Study reaction: Absolute return funds still have place in portfolios as failings 'not widespread'

Bestselling sector of 2015

There is still a role for absolute return funds in an investment portfolio, according to industry experts, despite criticism from the Financial Conduct Authority over the sector's use of performance objectives and fees.

In its Asset Management Market Study released today, the regulator said it was concerned about the reporting of returns and the charging of a performance fee by absolute return vehicles.  The regulator criticised absolute return vehicles for following cash benchmarks, instead of aiming to achieve a return above cash, and charging performance fees on lower investment objectives than their original stated ones. Amanda Rowland, PwC asset management regulation partner, said: "The study has highlighted absolute return funds need to be explained more clearly and be more transparent. It is n...