25/08/2022

Investors look to absolute return for diversification

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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.

  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 material is for your information only and is not intended to be used by anyone other than you. It is directed at professional clients and eligible counterparties only and is not intended for retail clients. This is not an offer or solicitation with respect to the purchase or sale of any security. The material is intended only to facilitate your discussions with Fulcrum Asset Management as to the opportunities available to our clients. The given material is subject to change and, although based upon information which we consider reliable, it is not guaranteed as to accuracy or completeness and it should not be relied upon as such. The material is not intended to be used as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s account should or would be handled, as appropriate investment strategies depend upon client’s investment objectives. The price and value of the investments referred to in this material and the income from them may go down as well as up and investors may not receive back the amount originally invested. Past performance is not a guide to future performance. Future returns are not guaranteed and a loss of principal may occur.

It is the responsibility of any person or persons in possession of this material to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdiction. Fulcrum Asset Management does not provide tax advice to its clients and all investors are strongly advised to consult with their tax advisors regarding any potential investment. Opinions expressed are our current opinions as of the date

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