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Liquid Alternatives

Diversifying beyond traditional asset classes

Helping construct more robust portfolios

Extraordinary monetary policy since the financial crisis has skewed investment returns and tightened the relationships between equities, bonds and property. This makes effective diversification much harder to achieve than ever before. Including absolute return funds in portfolios has the potential to address this problem, aiming to deliver better risk-adjusted returns for your clients. 

A focus on positive returns

There are a wide variety of absolute return funds. However, they share some common characteristics. They are typically benchmark unconstrained and aim to generate a positive return over the medium to long term, no matter what the stockmarket is doing. They may also use sophisticated investment tools like derivatives and techniques such as short selling to achieve their objectives.  It is important to note that absolute return funds are not providing a capital guarantee and may incur periods of loses for investors, in some cases the losses could be significant.  

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Accessing a world of expertise

Schroders is a leader in absolute return. Over the past 20 years we have built one of the world’s largest absolute return fund ranges.

Our stable of internally-managed strategies is complemented by a handpicked selection of externally managed, normally hard-to-access, absolute return funds.

These are offered in a liquid, transparent and regulated way through our investment platform called GAIA. 

Outcome-led fund range

Our absolute return fund range is built for three key outcomes for investors. These include investment strategies seeking to deliver capital growth; investment strategies that exhibit low to no correlation with major risky asset classes such as equities, bonds, currencies and commodities; and also, investment strategies seeking to provide some level of protection against rising inflation. Whatever your clients’ needs, we have a broad range of solutions that can help.

What are the risks?

Past performance is not a guide to future performance and may not be repeated.

The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall.

Please note that there is no guarantee that an absolute return fund will achieve its objective. 

Important information

The views and opinions contained herein are those of the authors, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This webpage is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the webpage when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested. All investments, domestic and foreign, involve risks including the risk of possible loss of principal. Investing in equities involves risk considerations, including market risk, prospects of stocks in the portfolio, changing interest rates, and real or perceived adverse competitive industry conditions. Investing in bonds may include interest rate, credit, inflation/deflation risk, mortgage and asset-backed securities, U.S. Government securities, and liquidity risks, to varying degrees. Investing overseas involves special risks including among others, risk related to political or economic instability, foreign currency (such as exchange, valuation, and fluctuation) risk, market entry or exit restrictions, illiquidity and taxation. These risks exist to a greater extent in emerging markets than in developed markets. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets. Private assets are intended only for qualified and/or sophisticated investors and carry special risk considerations, including illiquidity risk, wide differences in valuations, the use of leverage, and higher credit risk than traditional assets. Asset allocation and diversification cannot ensure a profit or protect against loss of principal. No investment strategy, capability or technique can guarantee it will achieve its stated objective. UK Investors: The data contained in this webpage has been obtained from sources we consider to be reliable. No responsibility can be accepted for errors of fact and the data should be independently verified before further publication or use. The sectors shown are for illustrative purposes only and not to be considered a recommendation to buy or sell. Exchange rate changes may cause the value of any overseas investments to rise or fall. In North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc providing asset management products and services as a US SEC registered investment adviser and in the capacity of Portfolio Manager with the securities regulatory authorities in Canada. For all other users, this content is issued by Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.

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