How Do I Choose the Best Absolute Return Fund?

An absolute return fund seeks to obtain positive returns by adopting investment management techniques that are different from traditional mutual funds.

Absolute income fund

Absolute return investment techniques often include:

1. Absolute income funds must be funds with a positive rate of return. To put it simply, investors often regard obtaining positive and long-term sustainable risk-adjusted excess returns as a major investment goal, but investment decisions are often made based on an uncertain future. The fund as an investment intermediary, although the fund manager who manages the absolute return fund will use short selling, leverage, and investment in other non-traditional instruments to achieve the goal of hedging systemic risks and reducing portfolio volatility, and the ultimate income comes from the investment or The underlying market that is being tracked, so it is simply inaccurate to think that absolute income funds must be funds that consistently achieve positive returns. Even if hedge funds can adopt multiple investment strategies to achieve the goals of hedging risks and reducing volatility, there are still some cases of failure to liquidate losses due to factors such as market and investment decision errors.

2. Absolute income funds are funds that invest in fixed income. If the design of domestic fund products simply invests in the bond market and obtains a fixed positive coupon income as a major selling point of absolute income funds, a concept mismatch will occur, which is more seriously a mistake in stealing the concept. Pure bond funds have the characteristics of low risk and low returns, but they are far from the concept of absolute income funds. As mentioned above, the main characteristics of absolute income funds are the use of short selling, derivatives and other trading strategies, through hedging, leverage, and Operational strategies such as high turnover have separated systemic risk from non-systemic risk and reduced the volatility of the investment portfolio. However, its investment target is not limited to low-risk markets such as fixed income, so it cannot be simply considered that absolute return funds are A large percentage of assets are invested in funds with fixed income and money markets. ^[1]