Absolute returns move into spotlight
Absolute return funds, or hedge funds, are becoming new sources of returns as downturns in the market begin to take effect according to Deutsche Asset Management (DAM) global chief investment officer Dean Barr.
Barr says that alternative investments such as absolute return funds are the fastest growing vehicles in the company at the present.
"The interest in these is enormous. Last year in the US, the liability side grew at 26 per cent of assets, for the first time in 10 years," Barr says.
"This is a wake up for many investors and says that returns forward may start to decline and has them searching how they can add to their portfolios the risk and return dynamics of the past few years."
Barr says DAM has spent some time in positioning itself for the change through offering absolute return investments via direct access or through a fund of funds approach.
"We have been motivated to do this after meeting with clients and discussing their objectives with many concerned about long term forward returns which they felt were not sustainable," Barr says.
"Absolute returns is going to be a very large investment area and to be successful here is to provide consistent value, even if this is modest, as long as it remains solid and diverse."
DAM head of retail for local operations Bruce Murphy says the Australian operation is well placed to make the most of this growing market.
He says the group has an advantage since it has been gained the size needed in wholesale and can now easily move into retail due to economies of scale.
DAM rolled out its first absolute return vehicle, the Deutsche Strategic Value Fund late last year and according to Murphy it has taken a conservative investment approach. He says the group has plans to roll out a second, less conservative offering by the middle of the year.
AUTHOR
Jason Spits
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
