Absolute return funds struggle with inflation

StruggleOnly 43% of funds in the IMA Absolute Return sector registered positive real returns in the twelve months to June 30th 2011, according to figures from FE Analytics.

Although 45 of the 56 funds with a twelve-month track record posted positive returns, only 24 of these outperformed both RPI and CPI to beat inflation.

Fees were not taken into account during the calculation of the funds’ performance, suggesting that in reality even more of the funds would have provided negative real returns.

Michael Holland, managing director of FE, said: “While absolute return funds endeavour to deliver positive returns, they have never promised to beat inflation. However, inflation is something investors must bear in mind if they want to preserve their capital and grow their wealth in real terms.”

The best performing fund over the year was the CF Odey Absolute Return Fund, up by 38.72%. The best performing group was L&G Investment Management, with all three of its absolute return funds ending the year ahead of inflation.

Thirteen absolute return funds were launched over the twelve months, taking the sector to 69 funds in total.

©2011 funds europe