Fewer than half of the funds in the IMA Absolute Return sector have managed to provide investors with a real return greater than the rate of inflation.
Absolute return funds do not promise to beat inflation, but aim to make money for investors in rising and falling markets.
According to data from FE Analytics, however, of the 56 funds with a one-year performance history, just 24 outperformed both CPI and RPI inflation, meaning 52% of the funds lost money in real terms.
CPI stood at 4.2% in June, while RPI was 5%.
The IFDS IM Octopus Absolute European fund was the biggest serial underperformer, losing 8.3%.
Two offerings from Schroders completed the bottom three.The Schroder ISF Asian Bond Absolute Return fund posted a 7.04% loss, while the Schroder ISF Emerging Markets Debt Absolute Return fund fell 6.14%.
FE Analytics said the performance figures do not take into account fees, which suggests an even higher percentage of funds would have failed to keep up with inflation if the costs were taken into account.
Over the last year, James Hanbury's CF Odey UK Absolute Return fund was the best performer, up 38.72%.
Second place was the GLG Emerging Markets Equity UCITS III fund, returning 29.79%. Paul Marriage's Cazenove Absolute UK Dynamic fund also made the the top three, returning 28.95%.
Michael Holland, managing director of FE, said: "While absolute return funds endeavour to deliver positive returns, they have never promised to beat inflation.
"However, inflation is something investors must bear in mind if they want to preserve their capital and grow their wealth in real terms."
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