Absolute return funds employ investment strategy that is intended to produce positive returns regardless of the direction of financial markets. Absolute return refers to aiming more to generate overall magnitude of returns, rather than returns relative to competitors or a benchmark index. An absolute return fund will employ investment management techniques that differ from typical managed funds. Absolute return funds are also sometimes called hedge funds, indeed there is usually little difference between a hedge fund and an absolute return fund, with absolute return funds often using futures, options, derivatives, short selling, arbitrage, leverage, and unconventional assets. However, there are absolute return funds that employ more traditional investment management methods e.g. value based stock picking.
Synonyms: Hedge fund, Index unaware, Absolute return fund.
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