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The Markets November 5, 2010
RIA Launches “Absolute Return” Portfolios
New absolute return portfolios are designed to deliver positive performance over a reasonable timeframe regardless of the ups and downs of the market.
Reported by Nicole Bliman
Registered investment adviser (RIA), “The Absolute Return,” based in Ann Arbor, Mich., designed each portfolio to target a rate of return higher than the “risk-free rate,” as measured by the yield of the 3-Month Treasury Bill. Annualized return targets range from 8% for an income-oriented portfolio to 15% for growth-oriented long/short portfolios relative to this risk-free rate, net of fees.
“We believe the economy is in a long-term period of sluggish growth where conventional investment methods will fail to deliver the rates of return people expect or require of them,” said Bob Palmerton, CEO of The Absolute Return.
Each portfolio is also actively managed to a portfolio volatility target using a measure called “drawdown” where drawdown targets, or maximum drop in monthly portfolio values from the previous peak, range from 4% for the income portfolio to 10% for the long/short portfolios.