Why allocating to absolute return strategies can benefit a portfolio of traditional assets
Our new Multi Asset fund will give investors access to a diversity of risk premiums and alpha opportunities while constraining market beta.
Absolute return funds come in many shapes and sizes. Together they form a heterogeneous industry characterized by a diversity of investment strategies that seek to generate returns that are less dependent on the direction of traditional bond and equity markets.
Absolute return strategies operate with significant variations in risk and are most often associated with hedge funds.
New and complementary sources of risk and return
Allocating to absolute return strategies can provide downside protection as managers often seek asymmetric return profiles and focus on capital preservation. By providing access to new and complementary return drivers that are uncorrelated to traditional asset classes, these strategies may further provide diversification benefits that can improve a portfolio’s risk-adjusted returns.
9-year track record in providing returns uncorrelated to the equity markets
For many investors, the primary reason to invest in absolute return funds is alpha generation where returns are driven by exposure to specific risks rather than market beta.
This objective is also emphasized in the absolute return strategies managed by DNB Asset Management. DNB launched its first absolute return fund in 2010 with an ambition to manage equity long/short strategies in a market-neutral portfolio construction with the purpose to deliver returns driven by alpha. Our global sector-focused DNB Fund TMT Absolute Return Fund now has a nine-year track record in providing returns that have been largely uncorrelated to global equity markets.
Exploiting investment opportunities while constraining market beta
With a strong belief in the merits of absolute return strategies, DNB is excited to be extending our absolute return offering through the upcoming launch of a new Multi-Asset fund. This fund will blend discretionary and systematic strategies and will invest across several markets such as equities, currencies, rates, and credit, drawing on the expertise of multiple investment teams within DNB Asset Management.