Absolute return strategies: the next major trend
The latest bout of share market volatility highlights the need for investors to have absolute return strategies in balanced portfolios, according to Headerson's head of alternative Australian equities.
David Rosenbloom said volatile investment markets had caused investors to focus on capital preservation, and absolute return funds.
"In markets like we've experienced over the past few weeks, and in fact years, alternative investment options which better manage risk and smooth out returns, are becoming increasingly attractive," he said.
Investors could be 100 per cent exposed to risk if they followed traditional investment theories and diversified across stocks. But that was not desirable, particular for older investors, he said.
Absolute return strategies delivered positive returns in both rising and falling markets and had little to no correlation to traditional assets.
That style of investing would be the next major trend, especially for those who were nearing retirement, as investors wanted to increase their alternative investment allocations and wanted protection.
Absolute return investing started largely for sophisticated investors, (which included institutions and family offices), but now self-directed investors and self-managed super funds (SMSF) recognised the benefits too, he said.
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
