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Absolute Return

  1.  Total return of a portfolio design to perform without reference to any Market measure although the objective is to make money regardless of market conditions the word absolute in this context means independent not positive the relevant distinction is with relative return which aims to outperform a market Benchmark or mutual fund grouping the classic example of an absolute return is that of a hedge fund held by wealthy investors and using strategies such as selling short Arbitrage and Leverage since 2008 however the uncertainty of financial markets have spurred the rise of ordinary mutual funds combining asset classes that characteristically respond in opposite ways to different economic scenarios known by such names as absolute return funds absolute value funds market mutual funds and permanent portfolios they hold assets that correlation analysis show move either in the same direction positive correlation or in a negative Direction opposite direction depending on market conditions for example in a market influence by Rising inflation Cass related Investments would fall in value reflecting the dollars declining purchasing power while gold being a time-honored store of value would probably rise cast by a correlation coefficient which would be somewhere between -1 representing perfect negative correlation and 1 representing a perfect random relationship at the other end of the range is plus one meaning perfect positive correlation correlation is a statistical computation and the resulting coefficient is a measure of degree perfect correlation is very rare
  2.  the concept of a permanent portfolio for average investors was championed by the late Harry Brown in his 1998 book Fail-Safe investing which post related that all possible economic outcomes could be reduced to four categories
    1.  Prosperity
    2.  Inflation
    3.  deflation
    4.  Recession
  3.  an unmanaged portfolio of equal dollar Investments That respond to each of those conditions some correlating positively others negatively would it an early rebalance and held long-term be both profitable and protected from serious losses his choice of assets was stocks long-term bonds gold and cash t-bills historical evidence was strong that overbroad. Of time the winning Investments would add more than the losing Investments would subtract and Browns fund average 6.38% over a 25 year. With only three losing years mutual funds using variations of Brown’s concept usually with enhancements adding some degree of risk have not been around long enough to provide meaningful long-term history In a few tumultuous  years they have been popular they have had both gains and losses but generally have tended to experience less variability then Relative return portfolios

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