An introduction to Long Only Absolute Return Funds and what they bring to the table

Financial institutions with their portfolios seeking diversification are opting long only funds over hedge funds in an actively managed alternative funds space to generate returns. Ever since the global market crisis, investment banking companies, financial institutions, banks and independent investors have been looking for ways to increase their profits by diversifying their investments and reducing their exposure to market risks. From traditional mutual funds to alternative investment funds, no stone has been left unturned in an effort to preserve capital and maintain positive returns. Long only funds are the newest entrants in the alternative funds ecosystem helping investors get a bang for their buck.

This fund takes only long positions on undervalued securities and reduces exposure to the risk of market drawdowns by holding basic asset class instruments. An alternative proven to deliver results, investment banking companies and other financial investors use this strategy to generate real returns despite the market condition.

Why focus on long only absolute return funds over traditional mutual funds?

Highly beneficial – Fund management companies are rewarded generously since long only funds take an incentive-based approach to charge management fees and performance fees, which are around 2% and 20% respectively. The fund’s ability to generate high profits ensures that managers get a rewarding experience.

More flexible – In contrast to the dull and rigid indexed assets, these funds provide more agility in terms of allocating assets, selecting securities, the level of exposure, and the use of leverage and allow investment opportunities in limitless amalgamations across the instruments from the basic asset class.

More consistent – They protect against the potential downside caused by depression in the markets by diversifying across a spectrum of securities and keeps generating consistent returns from the investments.

 

Investment banking companies, institutions and other investors have always been safeguarding their portfolios by constantly re-evaluating their strategies and long only funds with its diversified approach is the future of investments for anyone looking to generate consistent returns.