Absolute return strategies seek to generate returns independent of traditional market beta exposures such as equity, interest rates, credit, inflation, and property. Managers often generate outperformance by capitalising on market inefficiencies or behavioural biases of other investors, or by monetising exposure to various structural risk premia. Their investment processes may be systematic/quantitative, discretionary, or a combination of the two, with sample strategies including equity market neutral, macro and event-driven. The absolute return allocation is not meant to serve as a direct hedge to equity markets, but its lower volatility profile and low market correlation can provide capital preservation in a stress scenario.
How We Invest
We build absolute return allocations diversified across multiple sources of alpha in order to create an overall return stream that is more robust to shifting macro scenarios and market regimes. Diversification across strategies and managers is critical, and we aim to balance exposures based on risk contribution, with no single strategy or risk taker driving overall results. We partner with long-standing best-in-class managers, as well as emerging managers with proven track records that we believe represent the next generation of talent.