How to Invest In Absolute-Return Funds

Absolute-return funds are a type of mutual fund that strives to provide a steady rate of return regardless of what goes on in the stock market. In the past few years, this type of investment has started to pick up a lot of steam. Here are the basics of absolute-return funds and how to invest in them.

Absolute-Return Funds

The absolute-return fund is a mutual fund that utilizes a variety of different investment techniques in order to achieve gains. With this type of fund, the fund manager might choose to invest in stocks, bonds, other mutual funds, real estate and hedge funds. The fund manager will also use short selling techniques and derivatives in order to create additional gains for the investors. This type of fund regularly uses leverage in its investments as well.


Before investing in an absolute-return fund, you should do thorough research. You will want to make sure that you find an absolute-return fund that meets your investment objectives. Look at detailed information about the fund and see what type of investment strategy it uses. Some of these funds are riskier than others. This means that you need to evaluate the risk level of the fund before getting involved. You also need to see if the fund has provided a regular return for its investors over the years. If the fund does not have a good track record, you will want to steer clear of it.

Open an Account

In order to purchase shares of an absolute-return fund, you will need to open an account. You can open an account with a standard financial brokerage. In order to do this, you will need to look at many different brokers. Try to find one that has low commissions and a good track record. Look at all of the different features that the broker offers before making a decision on one.

Once you have located a broker that fits your needs, you will need to fill out some paperwork to get your account ready. You will need to provide basic personal information and information about your financial situation. If you are approved for an account, they will then allow you to deposit money into your brokerage account.

Place an Order

Once you have a brokerage account funded, you will be able to place an order for shares of an absolute-return fund. You will be able to do this with the assistance of your broker or through your online trading software. If you have a broker that allows you to trade online, you will be able to find the fund that you want and then purchase the desired shares from the comfort of your home.

Direct Purchase

If you do not want to open a brokerage account, you can also purchase mutual fund shares directly from the company that offers them. You can access them through their website and purchase shares directly from them.

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