Express. Home of the Daily and Sunday Express.
Savers warned about risks of absolute return funds
Older investors and pensioners may be putting their savings in jeopardy by investing in supposedly low-risk absolute return funds.
Millions of hard-pressed savers have been advised to invest in targeted absolute return funds, which aim to deliver a higher return than cash, but with less volatility than the stock market.
They are built to offer investors a positive return regardless of what happens to share prices.
They do so by investing in shares, bonds, cash, property andfinancialinstruments such as derivatives to produce a targeted return each year.
Savers seeking capital protection have flooded into these funds, making this one of the most popular investment sectors of all.
However, certified financial planner at Chase de Vere Patrick Connolly says some absolute return funds are sailing too close to the wind.
Out of more than 3,000 funds, three of last years four worst performers were in the targeted absolute return sector with investors suffering big losses, says Connolly: FP Argonaut Absolute Return lost 25.6 per cent,CF Odey Absolute Return lost 17.8 per cent and Old Mutual UK Opportunities lost 11.6 per cent. It is clear these funds are taking too many risks.
Connolly says it is astonishing that funds which aim to offer a positive return year after year can lose so much in such a short period: This is not what investors in this sector would expect.
FP Argonaut Absolute Returns disastrous 2016 performance followed three years of double-digit gains but Connolly says this is also a problem: While an investor might be happy with big gains, if a fund is taking that much risk it could also be liable to significant falls.
He says many pensioners and older people rely on the sector to provide capital protection and funds taking excessive risks should be stripped of absolute return status.
Connolly even suggests the absolute return sector should be scrapped altogether as the dangers are impossible to gauge: It is putting the financial interests of investment companies ahead of investors.
Mike Gordon, technical director at wealth managers Rutherford Wilkinson, says choppy performance shows that funds are failing to keep their promise of delivering returns regardless of what happens to the stock market: The clear disparity in performance highlights the range of strategies used, some of which are complicated and traditionally found only in the hedge fund industry.
Gordon says many funds perform really well in some periods yet miss their target in others: Given these extremes, they are definitely not doing what it says on the tin.
The largest fund in the sector, the huge 25billion Standard Life Global Absolute Return Strategies, fell 2 per cent last year, while the FTSE 100 gave a total return of around 20 per cent or 10 times as much
Gordon explains the struggling behemoth has an enormous array of different and complex strategies and this has hit performance: It makes far more sense to build a balanced, diversified portfolio of cash, bonds and investment funds to match your own attitude to risk.
Peter Griffin, investment director at advisers Gale & Phillipson, says some cautiously managed absolute return funds can be a useful way of reducing risk: We have used the Premier Defensive Growth Fund as a genuine alternative to cash and government bonds.
Make money from your bank account and improve your finances with these easy money saving hacks.
Martin Lewis: Money Saving Expert gives mortgage WARNING ahead of 2017
Martin Lewis: Get 5% interest on YOUR savings with Nationwide account
Carol Vorderman Twitter: Countdown star flaunts peachy bottom reuniting with naughty pal
TRAVESTY! Taxpayers paying 500,000 per MONTH for hospital not opening until end of 2020
Avenger Endgame Fat Thor EMBARRASSING deleted scene revealed
Australia could DITCH the Queen amid 30M SECOND REFERENDUM drive to become REPUBLIC
Mothers Day 2019 greetings, quotes and messages: How to celebrate Mothers Day in the USA
Pension change: Pension Credit reform NEXT WEEK could see couples lose 70,000 will YOU?
Pension Credit changes: What is the new change – and how could it cost you 7,000 A YEAR?
Pension WARNING: Savers urged to act NOW as Generation X not saving soon enough
Property for sale? The fastest and SLOWEST towns and cities for selling homes REVEALED
New death tax will see families pay up to 3,000 percent MORE with huge probate fee HIKE
Take insurance cover because the unexpected can happen to you too
Pension Credit: What is Pension Credit, are YOU eligible? How to claim Pension Credit
Boiler breakdown: Five-minute guide to finding the right boiler insurance
Inheritance tax: Shock number of adults DONT KNOW how much to leave what are the rules?
Probate delay: Bereaved families waiting MONTHS after technical glitch ahead of HUGE hike
Pension inheritance tax WARNING: Savers must be aware of THIS if taking out money early
Energy bills: Are YOU entitled to money back for poor service? 5MILLION unclaimed
TV licence REFUND: Holders could be owed up to 50 are you entitled to a refund?
Pension Credit: 1.3 million people missing out on hundreds of pounds EVERY YEAR are you?
End of FREE cash machines? All ATMs could soon CHARGE to withdraw cash shock report
Pension tax SHOCK: Pensioners pay 4billion MORE in income tax than previously thought
Help to Buy FLAW: Not knowing THIS about the ISA could RUIN your property exchange
Best bank account switch offers REVEALED and how to qualify for them
Universal Credit SHAMBLES: Claimants left in the dark are YOU getting right amount?
Premium Bonds checker: Who won the May 2019 Premium Bonds?
Premium bonds May 2019 winning numbers: How to check if YOU have won?
NS&I premium bond winners: Premium bonds high value winners for May 2019
Inheritance tax: Five brilliant – and LEGAL – ways to dodge death tax as its set to DOUBLE
Brexit update: How families are REALLY preparing for Britain leaving the EU
Energy bill RIP-OFF: Private renters stung by 41 MILLION switch lie
Probate fee HIKE: Stealth death tax on House of Commons agenda DESPITE Brexit delay
Pension news: The HIDDEN dangers of drawing down on your pension
Inheritance tax: Five ways to REDUCE your bill and keep more of your estate
);$(.gig-button-container,commentIco).append($(spotCommentCounter .spot-im-replies-count).clone(!0));$(componentDiv .gig-share-bar-container
See todays front and back pages, download the newspaper, order back issues and use the historic Daily Express newspaper archive.
Copyright ©2019 Express Newspapers. Daily Express is a registered trademark. All rights reserved.
docViewTop)return self.shouldStick=!0elsereturn self.shouldStick=!1,checkIfInView:function()var mentKpiTracking.StartTimer() ExpressApp.CommentKpiTracking.SetIsInView(!0)elseif(that.isInView===!0)ExpressApp.CommentKpiTracking.StopTimer() ExpressApp.CommentKpiTracking.SetIsInView(!1),StartTimer:function()this.timeStart=ExpressApp.Helper.Now(),StopTimer:function()this.totalTime+=(ExpressApp.Helper.Now()-this.timeStart)/1000,RoundResults:function(seconds)return Math.round(seconds),sendResults:function(clickorunload)var that=this;ExpressApp.CommentKpiTracking.StopTimer();if(this.totalTime
0)if(typeof ga!==undefined)ga(send,event,Comments,spot_im,ExpressApp.CommentKpiTracking.RoundResults(that.totalTime),useBeacon:!0) ExpressApp.CommentKpiTracking.checkIfInView(),TrackNumberOfComments:function(number)window.utag_data.article.comments=number;if(typeof ga!==undefined)ga(send,event,Comments,count,number,useBeacon:!0) if(number
).addClass(reveal-modal reveal-dynamic GallerySlideshowModal videoModal).appendTo(body);var modalBody=ExpressApp.RelatedVideoModal.GetModalContent();console.log(modalBody:+modalBody);if(ExpressApp.RelatedVideoModal.modalWindow&&ExpressApp.RelatedVideoModal.modal.is(:visible))ExpressApp.RelatedVideoModal.modal.bind(reveal:closed.reveal,function()ExpressApp.RelatedVideoModal.modal.empty().html(modalBody).reveal()) ExpressApp.RelatedVideoModal.Listener();ExpressApp.RelatedVideoModal.modal.empty().html(modalBody).reveal(),ReplaceModalBody:function(modalBody)console.log(modalBody:+modalBody);ExpressApp.RelatedVideoModal.modal.empty().html(modalBody);if(ExpressApp.Brightcove.IO)var relatedVideoIOInterval=setInterval(function()ExpressApp.Log([IO],waiting for videojs to finish init process,!!ExpressApp.RelatedVideoModal.modal.find(video).id);if(ExpressApp.RelatedVideoModal.modal.find(video).id)ExpressApp.Brightcove.IO.restart();clearInterval(relatedVideoIOInterval),50),GetModalContent:function()console.log(modalBody:+ExpressApp.RelatedVideoModal.video);$.ajax(url:ExpressApp.RelatedVideoModal.video,dataType:html,success:function(data)ExpressApp.RelatedVideoModal.ReplaceModalBody(tmpl(tmpl-relatedvideo-slideshow,videoContent:data))),Listener:function()$(document).on(click,.GallerySlideshow [data-button=close],function()ExpressApp.RelatedVideoModal.modal.trigger(reveal:close);setTimeout(function()$(.videoModal).remove(),500)));function expressPartnersCarousel()if($(.express-partners).length)$(.express-partners).orbit(directionalNav:!1,bullets:!0,animation:fade) function relatedVideosModal()$(document).on(click,.three-related-videos .Videos a,function(e)e.preventDefault();var url=$(this).attr(href);ExpressApp.RelatedVideoModal.Start(url)) function amazonProducts()ga(send,event,productWidget,view, a).click(function(e)ExpressApp.GoogleAnalytics.TrackEvent(productWidget,$(this).attr(href))) $(function()ExpressApp.CommentKpiTracking.TrackComments();ExpressApp.Gigya.checkCounters();ExpressApp.RelatedArticlesNewTab.AddTargetBlank();ExpressApp.ResponsiveIframe(singleArticle iframe:not([id^=ngxFrame]));expressPartnersCarousel();relatedVideosModal();ExpressApp.OutbrainWidget.Init())