Absolute return funds underperform in Q3


Absolute return funds have been among the poorest performers in Q3 on TD Direct Investing’s Recommended Funds list; however, the L&G Property Feeder fund has suffered the worst performance over the period.

In contrast, Japan funds and smaller companies, both UK and Europe ex-UK, were among the period’s top performers.

The Henderson UK Absolute Return, Newton Real Return and Kames UK Equity Absolute funds Return featured in the worst five among its recommended list, returning 2.1 per cent, 1.2 per cent and 1.1 per cent respectively.

The L&G Property Feeder fund returned 1 per cent, following a difficult period post-Brexit when the fund introduced a fair value adjustment.

TD Direct says absolute return has performed in the way it would expect in a rising market – below the FTSE All Share, but still in positive territory.

The bottom five was rounded out by the H2O MultiReturns fund, which returned 1.5 per cent.

The Man GLG Japan CoreAlpha returned 20.9 per cent over the period, while the Schroders Tokyo fund returned 16 per cent, particularly helped by its holding in Nintendo, which has benefited from the success of Pokemon Go.

Other funds in the top five included the Henderson Global Technology, which returned 18.3 per cent, benefitting from IT being the best performing sector.

The Liontrust UK Smaller Companies and Old Mutual Europe ex UK Smaller Companies returned 17.8 per cent and 16.2 per cent respectively.