Thought Leadership

Investors look to absolute return for diversification

25 August 2022

Over seven in ten investors (72%) say they are inclined to consider Absolute Return funds as part of their overall asset allocation, given the market conditions observed so far in 2022 and the increased correlation between the traditional asset classes of equities and fixed income.

The findings1, from a survey commissioned by Fulcrum Asset Management, point to an increasing interest in the asset class. Four in five (80%) respondents said they already had some Absolute Return exposure, and when asked about their asset allocation intentions over the next six months 70% said they planned to either increase exposure to Absolute Return, or keep allocations to this asset class the same.

While investors seemed to be inclined to allocate to the asset class, views and attitudes on Absolute Return were still varied with similar amounts of investors saying they were broadly positive (35%), compared to 34% who held broadly negative views. The remaining 30% were unsure, and encouragingly of these, the vast majority (71%) said that they were keen to learn more.

Reasons for liking the asset class, given by investors who were positive on it2 included the fact that it is a good diversifier in a portfolio (81%); and it is looking increasingly attractive in the current market conditions (61%).

Of those who were less favourable3, 63% cited that the strategies can be too closely correlated to Equities, and 54% perceived their fee structures were complex and might not represent good value. Just over half of those less positive on the asset class, 51% said that they haven’t always delivered on what they promised.

Speaking about the findings, Fulcrum Asset Management Deputy CIO Nabeel Abdoula said:

“With traditional asset classes performing poorly, we were not surprised to find that a majority of investors are considering Absolute Return strategies, if not already planning to increase their exposure.

We were interested to see that many people are keen to learn more about the strategies; that is a huge opportunity for us, and the rest of the industry. Also of note was that there are still some negative perceptions about the asset class. From Fulcrum’s perspective, our transparent fee structure, and our performance during periods of under-performance elsewhere, are living proof of these strategies delivering in line with their investment objectives.”

Fulcrum’s Diversified Absolute Return strategy is an all-weather multi-asset Investment strategy which follows an extremely robust and repeatable process, guided by economic theory and backed by empirical research.

About the Author

  1. Findings are based on a survey from independent research consultancy, Censuswide, between 6th June – 10th June 2022 with a sample of 102 Professional Investors including 51 IFAs and 51 Institutional Investors / Consultants / Pension Fund Managers / Trustees. Censuswide is a member of ESOMAR – a global association and voice of the data, research and insights industry. Censuswide complies with the MRS code of conduct based on ESOMAR principles.
  2. The sample size represents a snapshot of those who were ‘favourable’ to absolute return, of 36 respondents which is lower than Censuswide’s usual minimum of 50 to ensure data resilience.
  3. The sample size represents a snapshot of those who were ‘not favourable’ to absolute return of 35 respondents, which is lower than Censuswide’s usual minimum of 50 to ensure data resilience.

This content is provided for informational purposes and is directed at professional clients as defined in Directive 2011/61/EU (AIFMD) and Directive 2014/65/EU (MiFID II) Annex II Section I or Section II or an investor with an equivalent status as defined by your local jurisdiction.  Fulcrum Asset Management LLP (“Fulcrum”) does not produce independent Investment Research and any content disseminated is not prepared in accordance with legal requirements designed to promote the independence of investment research and as such should be deemed as marketing communications.  This document is also considered to be a minor non-monetary (‘MNMB’) benefit under Directive 2014/65/EU on Markets in Financial Instruments Directive (‘MiFID II’) which transposed into UK domestic law under the Financial Services and Markets Act 2000 (as amended). Fulcrum defines MNMBs as documentation relating to a financial instrument or an investment service which is generic in nature and may be simultaneously made available to any investment firm wishing to receive it or to the general public. The following information may have been disseminated in conferences, seminars and other training events on the benefits and features of a specific financial instrument or an investment service provided by Fulcrum.Any views and opinions expressed are for informational and/or similarly educational purposes only and are a reflection of the author’s best judgment, based upon information available at the time obtained from sources believed to be reliable and providing information in good faith, but no responsibility is accepted for any errors or omissions. Charts and graphs provided herein are for illustrative purposes only. The information contained herein is only as current as of the date indicated, and may be superseded by subsequent market events or for other reasons. Some of the statements may be forward-looking statements or statements of future expectations based on the currently available information. Accordingly, such statements are subject to risks and uncertainties. For example, factors such as the development of macroeconomic conditions, future market conditions, unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements. In no case whatsoever will Fulcrum be liable to anyone for any decision made or action taken in conjunction with the information and/or statements in this press release or for any related damages. Reproduction of this material in whole or in part is strictly prohibited without prior written permission of Fulcrum Copyright © Fulcrum Asset Management LLP 2024. All rights reserved.

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