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Absolute return strategies on selectors radar

Increasing market volatility is prompting fund selector interest in absolute return strategies, according to a survey report by Fund Selector Asia.

Two surveys were conducted at the FSA Income Forums in both Hong Kong and Singapore earlier this month. A total of roughly 100 fund selectors and portfolio managers participated.

Nearly 61% of the attendees at FSA’s Income Forum in Hong Kong were in favor of increasing allocation to absolute return strategy products over the next 12 months. Even those who would prefer holding on to their current allocations stood at a sizeable 26%.

Singapore had a similar response, with 57% intending to increase their allocation. However, the number of those planning to keep the allocation stable or decrease stood similar at roughly 22% each.

Absolute return funds are attracting attention during a time of increased market volatility. The products aim to offer returns along with capital growth by altering the asset allocation depending upon market dynamics. They also have the flexibility to implement long and short positions in their stated investment universe.

Global EM bonds favored

A sizeable number of fund selectors intend to increase allocations to global emerging market bonds.

When asked about preference for global emerging market bonds, more than half of the respondents (55%) in Hong Kong said they plan to increase exposure. In Singapore the number was 43%. 

Developed market bonds and global high yield bonds were a different story.

Half the respondents in Hong Kong said they will decrease allocations to developed market bonds and about one-fifth intend to hold on to their current allocations. 

Even in Singapore, nearly 46% of the respondents were in favor of decreasing exposure to developed market bonds but a similar number (42%) said they will hold their current allocations.

Coming to global high yield bonds, there was a slight difference in preferences.

In Hong Kong, nearly one-third of the respondents said they will decrease their allocation while half of the sampled delegates preferred to hold the current allocation. 

On the other hand, in Singapore the number for decreasing or holding the allocation remained same at 48%.

Only 3% of the Singapore respondents were in favor of increasing allocation to global high yield while the corresponding number for Hong Kong respondents stood at about 17% .

With respect to equities, selectors have shown a bias toward Asian and European equities, FSA reported earlier.


Part of the Mark Allen Group.