The Cumulative Performance chart on page 1 starkly illustrates the role of absolute return strategies in reducing the volatility of equity markets. Like insurance, the cost of the "hedge" to protect large down side moves will inevitably have a negative effect in strong bull markets.
Over the past few years, and prior to 2008, some funds' solution to that problem was leverage. Sadly, leverage can have dangerous results in sharply falling markets in the wrong hands.
For detailed analysis of performance for each strategy, industry comment and ranking tables, please open the attached .pdf file.
Attached Files:
September absolute return and hedge fund review (pdf format)
