The Puzzleand Promiseof 'Absolute Return' Mutual Funds

Funds designed to dampen volatility while earning solid long-term returns may use strategies such as extreme diversification across asset classes and rely on a wide range of derivatives

Mutual fund companies looking to attract investor dollars are betting the magic words today are "absolute return." Since the start of 2010, 12 absolute return funds have been launched, according to Morningstar, bringing to 32 the number of funds with "absolute" in their names. Their names are often one of the few things these funds have in common, except for a complexity that makes evaluating them difficult for all but the most experienced investors.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.