Absolute return bond funds

This relatively new offering from fund managers offers a new choice to income seeking investors with new risks attached.

Summary: Absolute return bond funds can help fill the need for income as cash and term deposit rates are low. These funds are benchmark unaware and can hold a wider range of fixed income assets than benchmark aware bond funds. Absolute return bond funds try to avoid the risk of capital loss through using a wide range of assets and strategies.

Key take-out: Returns have been relatively weak compared to traditional bond funds, but liquidity is higher than for term deposits.

Key beneficiaries: General investors. Category: Investment bonds.

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