Bonham Carter says the sector offers a middle ground for investors’ assets and can only grow in size.
He considers that a large part of the population aged 50 to 70 want their portfolios benchmarked against cash and are happy to give up some of the upside from long-only funds but do not want to invest everything in bonds due to inflationary concerns.
He says: “Some of the techniques in the hedge fund world that are available only to sophisticated offshore clients could be presented in an onshore portfolio, which represents an interesting opportunity.”
Bonham Carter says any involvement will be medium term and depend on the group finding the right fund manager and product design.
He says: “One problem we have is investors believe there is a guarantee in absolute return products so some education is needed from fund managers and advisers.
“Fund managers need the skills in house, in terms of shorting and on the hedge side, but I feel there is scope for the right person and process and it is ultimately an area I would like to get involved in but we want to get it right.”
Chelsea Financial Services managing director Darius McDermott says: “Absolute return is popular now while markets are difficult. That may not be the case in 12 to 18 months time but they do need to make sure that the product is right in terms of the manager, the systems and the ability to short.”