Absolute Return

Modern strategies pursuing positive returns with lower volatility

Absolute return funds use specialized tools that seek to reduce specific risks.

Advantages of absolute return investing

  • Committed to more consistent results
  • Diversified across multiple investments
  • A philosophy of low volatility
Fixed Income Absolute Return Fund PYTRX

This fund received a Morningstar Overall Rating

Multi-Asset Absolute Return Fund PDMYX

This fund received a Morningstar Overall Rating

Putnam Fixed Income Absolute Return Fund is managed by members of Putnam's Fixed Income team.

16

years experience working together at Putnam

27

years average investment experience

D. William Kohli
CIO, Fixed Income | Industry since 1988

Paul D. Scanlon, CFA
Co-Head of Fixed Income | Industry since 1986

Michael V. Salm
Co-Head of Fixed Income | Industry since 1989

Albert Chan, CFA
Portfolio Manager | Industry since 2002

Improve diversification

The funds can provide a differentiated return stream, one that is unlike the performance of traditional stock and bond funds.

They are independent from traditional benchmarks and can pursue strategies that are not aligned with the direction of the stock or bond markets.

Reduce volatility

Absolute return funds can seek to mitigate specific types of risk, such as market volatility or interest-rate movements.

They have more flexibility than more traditional funds to use a variety of tools, including derivatives, to establish portfolio positioning and hedging strategies.

Resources to help you talk about absolute return investing

Traditional investing means a rollercoaster of highs and lows

This graphic highlights the volatility of traditional asset classes and the impact on investors. Markets can go in any direction at any time. Investors in traditional funds focused on stocks or bonds need to be able to stomach volatility.

Institutions embrace responsible investing See historical market volatility
Absolute return strategies offer modern diversification

This study explains the philosophy of absolute return investing and how it is different from relative return investing.

  • Absolute return strategies have a different return and risk profile than traditional funds that invest in stocks and bonds.
  • Independent from traditional benchmark indexes, absolute return strategies have flexibility to seek to protect capital during bear markets.
  • Putnam offers a suite of absolute return funds intended to give investors the opportunity to reduce long-term portfolio volatility.
Download the paper (PDF)
Alternatives in action: A guide to strategies for portfolio diversification

This study analyzes the performance of different types of alternative strategies in distinct economic environments from 1994 to 2013, and includes:

  • Classification of alternatives by investment objective
  • Comparison of alternatives' long-term returns and risk
  • Performance in different economic scenarios
  • Analysis of returns and risk-adjusted returns
  • Insights about performance characteristics
  • Observations for portfolio strategies
Download the paper (PDF)