Allianz Global Investors launches UK absolute return fund

Allianz Global Investors is to launch a UK absolute return fund through its RCM unit, combining a strategic long-only portfolio with a market-neutral portion to offset risk in moving markets.

The fund will be run by Jeremy Thomas (pictured), chief investment officer of UK Equities at RCM.

Nick Smith, a managing director of Allianz Global Investors Europe, said: “Many investors have seen disappointing returns from UK equity markets over the last few years. Low bond yields and the threat of inflation mean that investments will have to work even harder and show real, long-term returns to combat this scenario.”

Thomas said: “We believe equity markets, for the foreseeable future, will be range bound, which means that rather than falling continually as in a secular bear market, or rising year after year as in a bull market, they are volatile, frequently testing both the lows and the highs.”

He added recent events such as the earthquake in Japan, European sovereign debt crisis and Middle East unrest suggest “it will continue to be a rollercoaster ride for equity investors”.

Thomas will aim to beat cash- and bond returns, and UK shares over the long term, but on less volatility than that of equities.

He will typically invest on a two- to three-year horizon.

“Our ideas are likely to be contrarian and will be based on stocks that we believe will perform over a three year period. Managers tied to a specific benchmark have a tendency to focus on relative rather than absolute factors and this can have adverse effects on performance,” he said.

David Walker

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