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Friday, October 29, 2010

Does Absolute Return Mean 'No-Return'?

News summary by MFWire's editors

Fundsters looking for premium returns in absolute return funds are in for a surprise.

The Wall street Journal's Daisy Maxey Investors writes that such funds are good risk mitgators but fail in delivering consistent positive returns.

Of 24 absolute return funds tracked by Morningstar, most reportedly performed better than the S&P 500 index in 2008, and most of those funds delivered positive, albeit lackluster, returns in 2009 in comparison with the index returns.

Maxey cites Putnam Absolute Return 100 [see profile], Ivy Asset Strategy [see profile] and T. Rowe Price Capital Appreciation [see profile] as examples of underwhelming AR funds.

Matthew Tuttle, chief executive of Tuttle Wealth Management LLC, was quoted saying that "...there will be a lot of absolute-return funds coming out that will be what I call 'no-return funds.'" 

Edited by: Hung Tran

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