Absolute Return
Absolute return investing seeks to deliver consistent, positive returns across all market conditions by employing a wide range of strategies, including derivatives, arbitrage, short selling, and leverage. Unlike traditional investment approaches that measure performance against a benchmark index, absolute return strategies aim to generate gains in both rising and falling markets. The objective is to achieve steady long-term growth with limited volatility, making capital preservation as important as capital appreciation. In recent years, absolute return investing has emerged as one of the fastest-growing approaches in global asset management.
CORE STRATEGIES
Long/Short Equity
Investors take long positions in undervalued stocks expected to rise and short positions in overvalued stocks expected to fall.
Market Neutral
Balances long and short positions so that overall market exposure is near zero, aiming to eliminate market risk.
Global Macro
Investments are made based on macroeconomic trends—interest rates, inflation, currencies, political events, or commodity prices.
Event-Driven
Focuses on corporate events such as mergers, acquisitions, bankruptcies, spinoffs, or restructuring.
Arbitrage Strategies
Seeks to exploit price discrepancies between related instruments, e.g., convertible bonds vs. stock, or statistical patterns across securities.
Multi-Strategy
Combines several of the above strategies to diversify risk and increase potential returns.
ADVANTAGES OF ABSOLUTE RETURN STRATEGY
The strategy employs a wide range of investment instruments and focuses on non-correlated assets, offering the opportunity to diversify portfolio and reduce exposure to directional market risk.
Potential for Superior Risk-Adjusted Returns
They are designed to take advantage of market inefficiencies and exploit opportunities through the use of advanced investment techniques.
Flexible and Asymmetric
Absolute return portfolio managers can adjust their investments quickly to changing market conditions.
Access to Niche Assets
By investing in niche assets and smaller sectors, investors have the opportunity to gain exposure to untapped or underrepresented markets.
Portfolio managers use a range of techniques to manage and mitigate downside risk, including the use of financial derivatives.