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Brokers wary of absolute future

The future prospects of many absolute return funds have been questioned by advisers who believe there are better investment opportunities in the short and long term.

Absolute return funds have been in the spotlight in the last year with mixed returns and a glut of funds laun- ched recently.

BlackRock’s £996m UK absolute alpha fund has stolen many of the headlines returning 13.7 per cent over 12 months.

Other absolute return funds have been hit hard, such as the UBS absolute return bond fund which has lost 26 per cent over a year.

Hargreaves Lansdown investment manager Ben Yearsley says: “So much money has gone in over the past six months and I am concerned that investors may be fickle and let their disappointment be known if an absolute return fund returns 10 per cent in a strong market which is returning 20 per cent.”

Wilson Dean director Nick Lincoln says: “I believe cash is the better option as you can still get around 5.5 per cent a year, which is a greater return than most absolute returns will be able to offer after the initial and annual fees.”

Kohn Cougar managing director Roddy Kohn says: “I think they can be a huge benefit, provided advisers drill down on each fund.”

Investment Analysis, p20

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