Capabilities in Absolute Return
We have been managing absolute return strategies for over 10 years and have developed a range of regulated UCITS funds which capture the best investment thinking from across our equity and fixed income teams. This covers European, UK and US Equity to Emerging Markets and Absolute Return bond portfolios. Alternative asset classes play an important role in client portfolios and our well-resourced and experienced investment team has created a robust process to uncover new investment opportunities.
- Diversification tools - the active use of derivatives means that absolute return portfolios typically display a lower correlation with their underlying markets than would be the case with a traditional fund. This low correlation is highly beneficial to investors wishing to lower the overall volatility of their portfolios by introducing greater diversification. Theoretically, an absolute return approach can be used in any asset class and, as the sector has developed, Threadneedle has extended its offering across a broad range of markets, including:
- Flexible products - absolute return funds are inherently more flexible than their traditional counterparts, with the ability to use derivatives for active investment purposes. Astute managers can turn volatility to investors' advantage and offer the potential to generate positive returns in falling markets.
- Emerging markets - many emerging markets boast economic fundamentals and fiscal positions that are far superior to their developed counterparts. This paradox, together with the volatility that sometimes characterises emerging markets, allows talented managers to add value.
- Equities - in-depth fundamental analysis provides an insight into the true value of companies. However, distortions due to sentiment or technical factors mean this value is not always reflected in market prices. This mismatch represents an opportunity for absolute return investors.
- Government bonds - fixed income markets offer a myriad of opportunities to exploit volatility and mispricing. Uncertainty over sovereign risk, interest rates and inflation can lead to short-term distortions between markets and along yield curves. Meanwhile the identification of secular trends can generate profits over the longer term.
- Currencies - foreign exchange markets act as a barometer of global sentiment and asset flows. Analysing these flows in the context of macroeconomic fundamentals creates the opportunity to benefit from short and long-term trends and to create additional alpha.
Our absolute return capabilities
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UK | European | American | Emerging Market Macro | Commodities | European Smaller Companies | Global Bond |
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Why Threadneedle?
- Experienced managers supported by an extensive research platform of over 130* investment professionals.
- Regional and sector expertise enhances our investment ideas and our return potential.
- Our diverse Absolute Return range spans equities, fixed income and commodities in a variety of themes from emerging markets to European smaller companies from Global Macro to High Yield.
- These funds aim to produce targeted positive returns over the medium to long term, irrespective of market conditions.
- These funds offer a flexible and opportunistic approach well suited to capture the gains created in volatile markets.
- Robust risk controls are a vital ingredient of successful absolute return investing. Threadneedle's systems have been proven over many years in a range of market conditions.
*As at 31.12.2011
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