Adviser and wealth manager HFM Columbus has warned investors on the ‘disturbing' notion alternative asset funds always deliver absolute returns.
The recent share market slide coupled with the commodity boom has led to a plethora of new alternative launches, but HFM Columbus urges caution on today’s fashionable asset classes.
“It now seems that everyone is launching alternative asset funds with a disturbing implication that they are absolute return," HFM investment director Rob Pemberton says.
“But we need to remember that agricultural land, commodities, currency, water, wine, emerging market debt, asset backed lending et al have the propensity for losing as well as making people money.”
In a study of the last 12-months in markets, HFM Columbus has highlighted a number of fund managers did manage to deliver exceptional returns in one of the toughest periods on record.
“Mark Lyttleton at BlackRock has put the arguably overpaid and overrated hedge fund community to shame with his market neutral UK Absolute Alpha,” Pemberton says.
“This fund has performed extremely well in adverse conditions, returning 16% for the year ended June 2008. Even his long only BlackRock UK Dynamic fund produced a positive return of 1.6% during a year in which the FTSE All Share fell by 13%.
“Also showing that not all of the UK fund management industry is incapable of protecting capital in this climate is Barry Norris whose Resolution Argonaut European Alpha fund managed a completely flat return over the same period.”
However, HFM says even proven managers have struggled in the recent downturn.
“Luminaries such as New Star’s Stephen Whittaker (UK Growth -36.4%) and Toby Thompson (UK Higher Income -33.9%), Carl Stick at Rathbone (UK Special Sits down 37.3%) and Bill Mott at PSigma (Income fund - 22.3%) are all unexpected entries in this hall of shame,” Pemberton says.IFAonline
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