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Absolute Return Objective
Definition
This is a return objective for an investment that is independent of a reference rate or benchmark.
Using the term Absolute Return Objective :
Absolute return vehicles have an absolute return objective so their inclusion in a portfolio may add diversification when compared to equities and bonds. In normal markets, increased diversification in a portfolio should reduce overall portfolio volatility.
Pay Special Attention To :
Don't be fooled thinking that an investment with an absolute return objective will always result in a positive return, regardless of market environment. These types of investments (absolute return vehicles) can and will lose money like benchmarked investments at certain times.
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Related terms
Hedge Fund , Absolute Return Vehicles , Hedging , Benchmark
