Standard Life Absolute Return Fund – What are the Alternatives?

Morningstar analyst Randal Goldsmith suggests alternatives for those concerned about changes at Bronze Rated Standard Life’s Global Absolute Return Strategies Funds (GARS)

Randal Goldsmith 22 June, 2016 | 11:48AM
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Randal Goldsmith: So you've asked about alternatives to GARS. Well I guess at the outset, what it would say is that although we've had some concerns about capacity and staff turnover on GARS. We still like it. It's got a very well designed investment process that has delivered on its return objective for the most part for over a decade now and with strong risk management around it.

For those looking for alternatives, both Aviva and Invesco have products which are almost identical. There are some similar products with other groups such as JPMorgan's Global Macro Opportunities fund and the Newton Real Return fund. We particularly like the Invesco Perpetual Global Targeted Returns fund and Newton Real Return fund.

But it’s the Invesco fund which really is the closest competitor to GARS. It's got the same cash plus 5% return objective aiming to do that with less than half the volatility of equities.

As with GARS the portfolio is built in a way that’s not constrained by a benchmark index. It's got multiple strategies in there that use derivatives to hedge and enhance returns. It's not got the longevity of GARS. The team is not quite as big, but what we particularly like about it, is that the three portfolio managers there.

They came from Standard Life, senior members of the multi-asset investing team involved with GARS from the outset and unlike GARS and really all of the other alternatives out there. They are dedicated entirely to the global targeted return strategy.

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Randal Goldsmith  is a Manager Research Analyst with Morningstar.