The Ucits III compliant fund aims to beat the one-month LIbor by 3 to 5 per cent over rolling 12-month periods, although this is not guaranteed. It will take long positions in global equities and use synthetic shorting to enable the portfolio to generate returns in falling markets. Synthetic shorting where managers create short positions using derivatives because shorting stocks directly is not allowed under the Ucits III rules.
The fund is managed by JPMorgan Asset Management’s global equities team led by managing director Gary Clarke. Clarke joined the firm from Schroders last year, where he was head of European equities, and has also worked as a senior portfolio manager for Gartmore and HSBC.
JPMorgan Asset Management says investors are looking at absolute return funds to provide steady returns with lower volatility than equities. However, in their quest for low volatility, many absolute return funds have disappointed in performance terms so JPMorgan will need its long and short positions to be spot on.
The absolute return sector comprises funds that focus on different regions and asset classes, with varying degrees of success. Some investors who are looking for an absolute return equity fund may prefer multi-asset funds for their diversity, while others may opt for UK focused absolute return equity funds from Odey and BlackRock.