Evidence of good behaviour
Most absolute return funds are only a few years old, and so the jury is out. Some have started to prove that their designs can be translated into attractive return and risk profiles. The correlation between absolute returns funds and cash, bonds, international bonds hedged back into Aussie dollars and the All Ordinaries index has been seen to be no higher than 0.19 – and that means these sort of funds have historically given something substantially different to more well–travelled paths, whilst making attractive returns.
There is every reason to foresee ongoing value, and diversification, being created both over time, and over the alternatives.
Tim Haywood is the chief investment officer/chief executive officer of Augustus Asset Managers.