Morningstar data on world's biggest such funds shows only one in the black for 2020
When one uses the word “contagion,” it can refer to how a negative impact spreads across financial markets or across geographies. The coronavirus pandemic is set to carve out a period in history when one can use both definitions at the same time.
“Markets have been roiled in recent weeks as fears grew that efforts to contain the coronavirus, including telling people to stay at home, could precipitate a global recession,” reported Reuters.
While central banks and governments have committed trillions of dollars in monetary and fiscal stimulus to supporting the global economy, high volatility and weak demand continue to persist, with no asset class left untouched.
It’s against that backdrop that multi-strategy funds, which generally diversify across a wide range of asset classes in an effort to weather downturns, have found themselves tested. Citing performance data from analysis firm Morningstar, Reuters reported that only one of the world’s largest multi-strategy funds offered to retail investors is in positive territory for the year.
The Invesco Global Targeted Returns Fund has managed to be up 0.5% in the year and down just 0.1% in March in pound terms. It’s a small win, as it has a target return of 5% per year above the UK’s three-month London Interbank Offered Rate over a rolling three-year period.
Meanwhile, Standard Life Aberdeen’s Global Absolute Return Strategy was down 3% in pound terms, and down 3.6% in terms of euros. Its year-to-date return in pound terms stood at 2.2%, which means it stands to fall well short of its target to surpass six-month UK LIBOR by 5% per annum over a rolling three-year period.
And up to March 23, BNY Mellon’s Real Return Fund was down 13.1%, with year-to-date losses of 14.4%. BNY told Reuters that sliding equity values dealt the heaviest damage to the fund; it also took some hits from alternative assets and emerging-market debt, which were softened through derivative protection.
“The portfolio remains focused on good quality companies with low operational and financial leverage and investments that are daily liquid and daily valued,” BNY said in a statement.
