Advising clients in a post-GFC climate.

Matthew Newham, Investment Director Wholesale Business, Standard Life Investments, said: “The global financial crisis has forced investors to focus on managing risk, and as a result they are moving away from the traditional balanced portfolio of equities and bonds and moving towards real return investing.

“Real return investing has an important role to play in terms of allowing investors to seek growth but also limit downside risk. Absolute return or real return strategies aim to provide positive returns irrespective of market conditions with reduced volatility compared to traditional portfolios.

“Typically, real return funds are not limited by any pre-set strategic asset allocation parameters. The careful portfolio construction offers broader asset diversification designed to deliver positive returns in a wide range of market conditions.”

Founder of the Association of Real Return Investment Advisers, Philip Reid, said: “The aim of the association is to give advisers a forum where they can discuss real return investing and gain a greater understanding of how such strategies can be integrated into clients’ portfolios.

“As independent advisors, we are seeking to get together so we can help each other to evolve best practice by incorporating real or absolute return investment strategies. The group is led by advisers, so they can access the information they need from fund managers to use real return strategies on behalf of their clients.”

The new group currently has four adviser members and four fund manager members, including Standard Life Investments. The group conducts quarterly roundtable meetings, with the next one in May.

Philip Reid continues: “The agenda is led by advisers, rather than fund managers. We want to be educated about the solutions and investigate the tools and seek insights into how we can best use real return strategies for our clients.”

The financial adviser members are Matthew Walker, principal of WLM Financial Services; Alistair Saunders, principal of Northstar Financial Advisers; James Walker-Powell, principal of More4Life Financial Services; and Fergus Hardingham of FM Financial Solutions.

Standard Life Investments’ Global Absolute Return Strategies Australian Trust ARSN 125 897 261 (GARS Australian Trust) is an absolute return strategy available to Australian institutional and retail investors (via selected wholesale platforms). The multi-asset fund aims to deliver a positive absolute return over the medium to long-term in all market conditions.

Matthew Newham added: “Our membership of the Association of Real Return Investment Advisers allows us to educate advisers about the benefits an allocation to an absolute return strategy can provide to a traditional client portfolio.”

GARS Australian Trust delivered an overall return of 10.6% per annum for Australian investors, net of fees, over the four years from inception in 2009 to 31 December 2013 . That performance is ahead of its objective of cash + 5% per year, net of fees, over rolling 3-year periods. The volatility of the fund over the four-year period has been just 4.5% compared to global equity volatility of 10% (12.8% for Australian equities).

GARS Australian Trust relies upon typically 25 to 35 strategies that span global markets, each one selected for its return potential on a three-year horizon. No individual strategy dominates the portfolio and the strategies are designed to complement each other so the portfolio can work as a whole and deliver gains to investors in a variety of market conditions.

The post Educating advisers on real returns appeared first on AdviserVoice.