MLC launches absolute, long-term option

MLC has launched a new absolute return multi-manager product, designed to deliver a target 5.5 per cent real return over a 20 year time period.

The fund’s composition is similar to other MLC multi-manager funds with several extra managers, such as a commodities and a private equity manager, added to the mix.

Only two of the managers in the fund are absolute return focused. The rest of the managers, which span all the major asset classes, are configured differently to similar MLC multi manager funds to enhance the absolute return focus.

MLC Asset Management chief investment officer Michael Clancey warned that like all absolute return funds, investors might have to cope with comparatively lower returns in strong bull runs.

“If you are prepared to accept the risk of being different then you might want to put some of your portfolio into this,” Clancey said.

Although Clancey could not guarantee that the fund would return a 5.5 per cent real return in 20 years time, he admitted this target rate of return was relatively conservative.

Clancey said the manager and asset allocation of the fund could be changed, but only in response to “long-run” cycles.

MLC said it has geared the portfolio to help it achieve the 5.5 per cent target. For every $100 invested, another $100 will be borrowed by MLC, with $40 from the resultant $200 shorted.