What is ABSOLUTE RETURN? What does ABSOLUTE RETURN mean? ABSOLUTE RETURN meaning – ABSOLUTE RETURN definition – ABSOLUTE RETURN explanation.

The absolute return or simply return is a measure of the gain or loss on an investment portfolio expressed as a percentage of invested capital. The adjective absolute is used to stress the distinction with the relative return measures often used by long-only stock funds that are not allowed to take part in short selling.

The hedge fund business is defined by absolute returns. Unlike traditional asset managers, who try to track and outperform a benchmark (a reference index such as the Dow Jones and S&P 500), hedge fund managers employ different strategies in order to produce a positive return regardless of the direction and the fluctuations of capital markets. This is one reason why hedge funds are referred to as alternative investment vehicles (see hedge funds for more details).

Absolute return managers tend to be characterised by their use of short selling, leverage and high turnover in their portfolios.

Although absolute return funds are sometimes considered not to have a benchmark, there is a common one: the funds should do better than short-dated government bonds (e.g. T-bills in the United States). For example, if such cash instruments yield 15%, at the same time a certain fund returns 5%, that would be considered not very good. In the case where the cash rate is close to zero, such as the early 2010s decade, this makes little difference.

Some absolute-return managers are very active with their portfolios, buying and selling shares more frequently than normal investors, because they focus on short-term investment opportunities lasting less than 90 days. Turnover is the rate at which managers rebalance their portfolios, and among other things it depends on the hedge funds size: in 2008 hedge funds with less than 15M USD in AUM (assets under management) had a 46.9% turnover per month whilst funds with over 250M USD in AUM had only 9.8%.

When autoplay is enabled, a suggested video will automatically play next.

CAGR vs Absolute vs Trailing vs Calendar Returns Different types of Returns

What is a hedge fund? – MoneyWeek Investment Tutorials

Financial Management Ch 4, Risk and Return for Final Year (IGNOU)

What is CORRECTION PAPER? What does CORRECTION PAPER mean? CORRECTION PAPER

1888-2019 Premier League Points Race! Who wins it? United, Liverpool, Chelsea, Arsenal, City?

What is PRAGMATIC VALIDITY? What does PRAGMATIC VALIDITY mean? PRAGMATIC VALIDITY meaning

Mutual Funds and SIPs Returns- best SIP investment plan 2019 in hindi

What is Beta? – MoneyWeek Investment Tutorials

What is SCREW PICKER? What does SCREW PICKER mean? SCREW PICKER meaning & explanation

How To Calculate CAGR on Excel Spreadsheet? Absolute Return Versus CAGR!

Hedge funds intro Finance & Capital Markets Khan Academy

The Problem with Mutual Funds – Rate of returns

What is LONDON BOOK FAIR? What does LONDON BOOK FAIR mean? LONDON BOOK FAIR meaning