City Financial’s Crawford critical of ‘market neutral’ absolute return funds

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City Financial fund manager David Crawford is sceptical of some of the market neutral funds in the IMA Targeted Absolute Return sector.

Market neutral funds aims to balance bullish investment picks with bearish ones to deliver a consistent return. However, some regard them as fairly complex products that may not be suitable for all investors.

Crawford, who manages the £33m City Financial UK Equity fund which also resides in the IMA Targeted Absolute Return sector says: “Personally I would question the low-risk market neutral funds. They offer no risk but they also offer an almost guaranteed low return.

”I suppose one has to question what is the point of investing in something that at best is going to offer a very low return?”

However Crawford  feels the IMA’s recent rebrand of the sector was beneficial to the funds, especially regarding the new review timeframes put in place.

Crawford says: “I think it is better and the sector is quite wide and eclectic. 

“When thinking long term, if you are running a fund you don’t want to be adjusting behaviour accordingly over 12 months amid fears your performance might go down – that is not serving the investor in the best way. The sector is now moving away from being held hostage to a 12 month timeframe.”