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November 10, 2010 at 06:02 AM
NEW YORK — A line-up of absolute-return fund experts spoke Tuesday before a group of more than 100 advisors from large and small asset management firms to persuade them that now is a good time to invest in the relatively new and risk-focused asset class.
In a crowded and gilt-edged conference room in Manhattan's St. Regis Hotel, Putnam Investments Absolute Return Symposium speakers touting the funds included Putnam President and CEO Robert Reynolds (left); Gabriel Burstein, global head of portfolio solutions and investment research for Lipper Thomson Reuters; and Merl Baker, a quantitative researcher and principal with the Brightwork Partners consulting firm.
In comments that took on a dark edge as the experts talked about high risks and low rewards against the backdrop of a troubled and increasingly complex global economy, the speakers urged somewhat skeptical advisors to consider absolute-return funds as an alternative to target-date funds and to learn how to incorporate them into client portfolios.
“We’re so focused on the financial crisis and [the Federal Reserve’s program of] quantitative easing that we often miss the bigger picture,” said Burstein, a former hedge fund strategist with Goldman Sachs and author of "Macro Trading and Investment Strategies: Macroeconomic Arbitrage in Global Markets."
Looking at a New Paradigm
The bigger picture, Burstein said, is that advisors are typically 100% invested in long-only funds when they should be switching to “a new paradigm” that involves putting their money into absolute return funds that don’t focus so heavily on market direction.
Matching liabilities to financial goals such as 401(k) and 529 plans matters more than just producing superior returns, he said, adding that assets under
management in absolute return funds have proliferated over the last decade despite—or perhaps because of—the financial crisis of 2008.
