Absolute return funds on course for worst ever annual outflows

Absolute return funds on course for worst ever annual outflows

Investors have pulled money from the all-weather funds after they disappointed during the coronavirus sell-off

Absolute return funds, products that promised investors positive returns in all markets, are on track to record their worst-selling year to date after suffering poor performance during the coronavirus market shock.

European investors withdrew a net €18.6bn from absolute return funds, which include former blockbuster products such as Standard Life Aberdeen’s Gars fund as well as quantitative strategies run by AQR and BlackRock, during the first 10 months of the year, according to data provider Morningstar.

This is just shy of the €21.3bn that was withdrawn from the funds over the whole of 2019, making the sector likely to end 2020 with its highest ever annual outflows, said Morningstar.

The data covers European-domiciled funds categorised by Morningstar as alternative multi-strategy. These products invest in a range of assets and derivatives to achieve a set level of returns above cash irrespective of market conditions.