As part of our commitment to ‘thinking investments and investor needs’, we have introduced our ‘debating chamber’, which is our vehicle for engaging and stimulating debate and thought leadership points on key industry themes.
Targeted Absolute Return funds: Mind the gap!
This is our first debating chamber paper, written in conjunction with independent consultancy gbi2. The paper highlights the reasons why professional advisers and investors need to think carefully about the Targeted Absolute Return sector … and the risks that actively managed mutual funds make investors bear.
The risks of active fund management are not borne by fund managers, they are worn by investors. This contrasts with structured products, which allow investors to abdicate from various risks, including market risk and fund management process risk, delegating these risks to investment banks / counterparties, who must deliver the terms of the bonds that they issue, with no wriggle room, no explanations and no apologies, unless they are bust.
This is a significant USP benefit of structured products, that can serve investors well, in diversified and balanced portfolios.
The paper prompts professional advisers and investors to think objectively about the merits and efficacy of structured products, and their potential to add value within investor portfolios.