In the current near zero interest rate environment, there is greater demand from clients for investment solutions with lower volatility. With the outstanding success of the well documented Standard Life (GARS) fund, we have seen the introduction of Standard’s latest absolute return fund ARGBS (Absolute Return Global Bond Strategies Fund).

What are absolute return funds?

As we are all aware there is no such thing as an absolute return, so the heading can be slightly misleading. Traditional investments tend to focus on the main asset classes (Equities, Bonds, Property) and tend to focus on longer term duration, in an effort to achieve positive returns. Unfortunately its not that simple and as we have experienced short term performance can be volatile. Absolute return funds aim to deliver positive investment returns regardless of the market conditions.

How does it achieve this?

Typically absolute return funds and in particular the GARS & ARGBS invest across a wide range of fixed income investment opportunities in both traditional and advanced asset strategies. This can include credit, government bonds and international currencies. The fund has numerous strategies in play at the same time which reduces the risk associated with focusing on a single macro strategy. While this is all well and good saying when the markets are in their current bull cycle these strategies will be truly tested when the markets are falling.

Are you suitable for ARGBS?

With every investment you make there is going to be a degree of risk, if you leave money sitting in a deposit account you are believe it or not running the risk of losing the purchasing power of your capital. Unless you are receiving an interest rate greater than the current level of inflation, which I doubt the vast majority of people are this will be a reality. If you are looking to take a small degree of risk, and you are comfortable achieving +3% per annum over 3 years then this might be the way to go.

If you would like some more information in relation to the above fund or any funds in the marketplace please don’t hesitate to contact a member of the investment team today!

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