Pensions Advice, Retirement Planning - Investment Financial Adviser Dunfermline, Fife, Scotland UK

Posted by William on July 11th, 2008 in Investment Advice

Today’s good news - Hope for the future !

Hi everyone,

With Global Markets in a state of flux at the moment and many clients concerned about the falling value of their investments, what, if any, are the solutions?

Whilst putting it in cash ensures that you don’t lose anything, it also ensures that the don’t make anything in real terms either. Traditional alternatives such as bonds and property haven’t exactly set the heather on fire in recent terms either.

One possible solution lies in Absolute Return Investing

Since arriving on the scene 4 years ago and due to a change in regulation these funds have appeared in large numbers and in different forms. Absolute Return Investing Funds aim to achieve a steadier return which is not measured against a particular index, by adopting various strategies.

One invests in a wide range of assets, including bonds, cash and shares, but also things like property and hedge funds. It can sometimes mean using derivatives, which are specialised products that allow investors to bet on the future price movement of an asset.

Absolute Return Investing Allows you to:

• Make money when an asset is falling in price
• Make money when an asset is rising in price
• Achieve a steadier return which is not measured against a particular index
• Enjoy the possibilities of being able to make money whether markets are going up or down

A good investment strategy

Good investment strategy is based on how well the responsible investment team are able to perform. In recent years, managers offering ‘purely’ or ‘predominantly’ global products have significantly outperformed those those offering only regional products.

Do they get a job done?

As with everything there are good and bad funds falling under the banner of Absolute Returns. Returns on these funds have varied greatly so it is important to choose carefully.

One absolute return fund gaining in popularity due to its excellent performance is Black Rock’s UK Absolute Alpha Fund. Investing primarily in a portfolio of equities and equity related securities (including derivatives) of companies in the UK it uses a number of strategies and instruments to provide very impressive returns , especially in what is now a bear market. Over 1 year it has returned 12.8% and since launch (just over 3 years) it has returned 44.1% (source www.blackrock.co.uk 11/07/08).

Another fund which I’m particularly fond of is The Arch Cru Specialist Portfolio Fund which has a target return of cash + 6% and has achieved an annualised return of 15.55% since launch (source www.cruim.co.uk 11.0708).

This one uses a global strategy across various markets such as Private Finance, Structured Finance and Private Equity. I like it’s individualised approach which provides genuine negative correlation to most funds out there.

Diversification are key to successful Absolute Return Investing. I am confident that the funds will appeal to a broad range of UK investors, particularly in the current market environment.

If you require any further info on anything discussed in this article do get in touch. Please remember that as ever, past performance is not necessarily a guide to future performance.

See you next time!