Which was the only absolute return fund to deliver a positive return over three consecutive years?

GARS fund overtaken as largest fund

AJ Bell research shows that only one absolute return fund has delivered a positive return in each of the past three years, while four funds saw losses in each of the past three years.

In the three years between 2016 and 2019, covering the Brexit process, just 64 absolute return funds out of 105 delivered a positive return, but when looking at each year indiviudally only the Natixis H2O MultiReturns fund made a positive return.

While the Natixis fund made a marginal return of 0.1% in 2016, it went on to return 7.1% in 2017 and 10.4% last year.

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In the wider sector, a total of 61 funds delivered a positive return in 2016 and 2017, but in 2018 the Natixis fund was the only mandate to provide a positive return.

Meanwhile, the Insight Absolute Insight Currency, Kames UK Equity Absolute Return, Schroder European Equity Absolute Return and Threadneedle Absolute Return Bond funds have seen a loss every year for the past three years.

Sector giant, the £12.6bn Standard Life Investment Global Absolute Return Strategies fund, has seen a 6.5% loss over the three years and has been overtaken as the largest fund in the sector by the £12.7bn Merian Global Equity Absolute Return fund, which has handed investors 6.2% over the three years.

Laura Suter, personal finance analyst at investment platform AJ Bell, said: "Investors have flooded into absolute return funds over the past few years, driven by worries about global market falls and the ongoing uncertainty over Brexit. Over the past three years £7.2bn has been invested in these so-called 'safe haven' funds, which aim to make a positive return in all market conditions, taking the total sector amount invested in the funds to £72.1bn.

"The three-year performance figures over the Brexit market turmoil (below) highlight the vast disparity and volatility in absolute return funds and show that many are far from delivering in all market conditions.

"The worst-performing fund, Argonaut Absolute Return, handed investors a 23% loss, while the best performer, Polar Capital UK Absolute Equity, has delivered a 57% return. Even the Polar Capital fund has not been for the faint-hearted, with some of the highest volatility in the sector."