What are absolute return investment strategies?

Absolute return investment strategies include using short selling, futures, options, derivatives, arbitrage, leverage, and unconventional assets. Absolute returns are examined separately from any other performance measure, so only gains or losses on the investment are considered.

Why are absolute return strategies so greedy?

The greed is because the Absolute Return strategies are boring and will not deliver 20-30% years. What they will do is deliver consistent returns in any market, up, down or sideways. Be careful and don’t compare the returns of the Absolute Return strategies to typical long/short strategies, which outperform Absolute Returns.

Why do hedge funds use absolute returns?

The adjective "absolute" is used to stress the distinction with the relative return measures (often used by long-only stock funds) that are based on comparison to a benchmark. The hedge fund business is defined by absolute returns.

How do you calculate absolute return?

Calculating absolute return involves applying a simple formula. You can then compare it to an investment’s relative return to help decide if it’s something you should add to your portfolio. A financial advisor can help you create a financial plan for your investment needs and goals. Absolute Return Definition