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Fewer than half of absolute return funds beat inflation

Fewer than half of funds in the absolute return sector have beaten inflation over the past year.

Just 43 per cent of the 69 funds in the sector beat inflation over the 12 months ending June 30, 2011, to deliver positive results, according to the latest results from FE Analytics.

The results demonstrate that only 24 funds outperformed both RPI and CPI while three managed to beat CPI but failed to match RPI.

Although 18 further funds were found to have delivered positive returns, they underperformed CPI meaning a loss in real terms for investors.

A further 11 ended the period in negative territory.

In total, 51.8 per cent were found to have lost investors money, in real terms but FE says losses could be more apparent than the results initially indicate.

“These performance figures do not account for fees so in reality a higher percentage of funds would have failed to keep up with inflation once costs were taken into account,” said FE Analytics on the results.

The CF Odey UK absolute return Fund, the GLG emerging markets equity Ucits III Fund, and the Cazenove absolute UK dynamic fund have come in as the best performing funds over the year, up 38.72 per cent, 29.79 per cent and 28.95 per cent respectively.

Three of L&G Investment Management’s funds finished ahead of inflation, making it the best performing group. The L&G diversified absolute return trust generated 17.98 per cent, the L&G European absolute fund delivered 13.49 per cent; while the L&G UK absolute fund rose 8.29 per cent.

FE managing director Michael Holland says: “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.”


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