Standard Life Investments

Absolute return investing

Traditional investment funds seek returns by investing in equities (shares), fixed income (bonds) or property. While these asset classes have generally produced positive returns over the long term (often regarded as 5 to 10 years or longer), short-term performance can be volatile, giving investors a bumpy and uncertain investment journey.

By contrast, absolute return funds seek to achieve positive performance over the shorter term (often regarded as one year) irrespective of the market conditions. To make this possible, absolute return portfolios typically invest across a wide range of asset classes and geographies in order to spread portfolio risk.

They also use advanced investment strategies. An example would be a relative value strategy, which can make money irrespective of whether markets are rising or falling. Absolute return fund managers also have the facility to use derivatives (such as futures, options). For instance they could anticipate that a particular currency would rise in value and if they turn out to be right make money as a result. Standard Life Investments offers a number of absolute return portfolios, all of which follow our multi-asset investment process and philosophy. Each of these portfolios has a different investment universe and distinct performance objective.