How absolute return strategies can help provide a less volatile investment experience
U.S. investors have had to become increasingly self-reliant in order to fund a larger portion of their retirement income for a longer period of time. Meanwhile, global economic forces have converged to significantly deplete their retirement assets. Whether these circumstances represent the beginning of a "new normal" or simply serve as a reminder of what we always knew could happen, the fact remains that many investment strategies utilized today do not fully address the financial risks that most Americans face.
Though a diversified portfolio of traditional, or relative return, mutual funds has historically allowed investors to accumulate significant retirement savings over long periods of time, many of those already in retirement have become painfully aware of the toll that bear markets can take on their ability to generate a consistent, adequate source of income. The need to preserve assets through varying market conditions to help ensure the ability to meet future liabilities is behind the growing interest in absolute return investing. Read Putnam's article, "Smoothing out the rough patches with absolute return."