Invest
The case for absolute return investing
Misconceptions around absolute return investing could be holding investors back from wealth creation, an investment manager has said.
The case for absolute return investing
Misconceptions around absolute return investing could be holding investors back from wealth creation, an investment manager has said.
Speaking to Nest Egg, ARCO Investment Management portfolio manager George Colman questioned the logic behind investing to beat a benchmark when investors can still lose capital.
“Investors want positive returns (above cash), not to beat a benchmark when they’re still losing money,” he said.
“The greatest enemy of wealth creation is having to make-up for any capital losses first.”
With this in mind, Mr Colman said capital preservation at all stages of the market cycle is critical for investors and that absolute return investing can achieve this.
Continuing, he argued that despite misconceptions, absolute return investing is an alternative strategy that should be considered mainstream due to its history and accessibility in addition to its performance.
“It is proven to improve the risk/return (diversification) options for a portfolio,” Mr Colman said. “It has been around for many years [and] it is a more readily available strategy for investors today (and no longer just for the institutions).”
Speaking at a media briefing, ARCO chairman Bruce Loveday added that the strategy has been growing in popularity among self-directed investors.
“The ARCO Absolute Return Trust has generated over 8 per cent p.a. net of fees for investors since September 2008, during which time the largest drawdown experienced was 4.7 per cent, compared to over 30 per cent for the broader Australian equity market,” he said.
“Adding this type of downside protection can help investors and their advisers build better portfolio outcomes in terms of diversification and consistency of returns.”
Mr Colman added that this consistency is important as the likelihood of volatile markets increases.
“Like interest rates, overall market volatility has been unusually low for a long time – when it comes back, the investor is in for a rougher ride,” he said.
“Geopolitical risk is always a risk for investors (and sometimes an opportunity). The markets have been able to brush most recent events aside – helped by cheap money and rising markets.
“This will likely change as rates rise; money gets more expensive, housing softens and no longer has the ‘wealth effect’ that it has to date – in Sydney and Melbourne especially – and households get more nervous and investors more sensitive to them.”
Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more
Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more
Property
How to determine the real value of a property
With various factors affecting market value and pricing, can one truly predict what buyers will pay for properties? ...Read more
Property
House prices tipped to soar 20% in 2 years: Westpac
House prices in Sydney are tipped to grow by 20 per cent over the next two years, and by 18 per cent in Melbourne, as a leading economist predicts strong economic growth following the rollout of the C...Read more
Property
5 tips to unearth the next property hotspots
A property expert has bullishly claimed that property hotspots are a “complete myth” that almost guarantees buyers will pay top dollar, and has instead urged buyers to seek out the “warm spots...Read more
Property
Top 10 inland rural towns to invest in
While it’s become apparent that regional housing markets have stolen the spotlight, having outpaced their capital city counterparts in 2020, new research has shown that inland rural towns have also ...Read more
Property
Where to buy under $300k
A positively geared property with high capital growth potential does not necessarily need to carry an astronomical price tag, an expert has said, with new market entrants able to land a home for under...Read more
Property
‘Great Australian dream’ of owning a home lives on amid COVID
Most Australian investors and home buyers were largely undeterred by the events of 2020, remaining eager to push through with their investment plans, a new survey has found. ...Read more
Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more
Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more
Property
How to determine the real value of a property
With various factors affecting market value and pricing, can one truly predict what buyers will pay for properties? ...Read more
Property
House prices tipped to soar 20% in 2 years: Westpac
House prices in Sydney are tipped to grow by 20 per cent over the next two years, and by 18 per cent in Melbourne, as a leading economist predicts strong economic growth following the rollout of the C...Read more
Property
5 tips to unearth the next property hotspots
A property expert has bullishly claimed that property hotspots are a “complete myth” that almost guarantees buyers will pay top dollar, and has instead urged buyers to seek out the “warm spots...Read more
Property
Top 10 inland rural towns to invest in
While it’s become apparent that regional housing markets have stolen the spotlight, having outpaced their capital city counterparts in 2020, new research has shown that inland rural towns have also ...Read more
Property
Where to buy under $300k
A positively geared property with high capital growth potential does not necessarily need to carry an astronomical price tag, an expert has said, with new market entrants able to land a home for under...Read more
Property
‘Great Australian dream’ of owning a home lives on amid COVID
Most Australian investors and home buyers were largely undeterred by the events of 2020, remaining eager to push through with their investment plans, a new survey has found. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
