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what is Absolute return and what are the advantages of Absolute return?

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imptags : what is Absolute return, What does absolute return meaning, What is absolute return example, What is absolute return strategy, What is absolute return vs relative return, What is difference between absolute return and CAGR in mutual fund,What is absolute return fixed income,

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what is Absolute Return?
The return an asset generates over a given period is known as the absolute return. This metric examines the percentage-based growth or decline in value that an asset, like a stock or mutual fund, experiences over a certain time period.

Because it just considers the return on a specific asset and does not compare it to any other metrics or benchmarks, absolute return differs from relative return.

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working of Absolute Return :
The amount of money that an investment has made is referred to as the absolute return. The absolute return, which is also known as the total return, calculates the gain or loss a portfolio or asset has experienced without reference to a benchmark or other norm. Returns can be either positive or negative and are sometimes thought to be unrelated to other market activity.

Returns, both relative and absolute
A mutual funds generally aims to generate returns that are higher than those of its peers, the funds in its category, and the market as a whole. The relative return method to fund investment is the name given to this style of fund management. A comparison to a predetermined benchmark, industry norm, or general market performance is frequently used to determine an asset’s success.

An absolute return fund, used as an investment vehicle, aims to generate profits by using investment management strategies that are distinct from those used by conventional mutual funds. Short selling, futures, options, derivatives, arbitrage, leverage, and unusual assets are a few investment methods that offer an absolute return. Only profits or losses on the investment are taken into consideration since absolute returns are analysed independently of any other performance measures.

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The Evolution of Absolute Return Investments
In 1949, Alfred Winslow Jones established the first absolute return fund in New York. Absolute return fund investing, often known as a hedge fund, has recently become one of the investment products with the quickest rate of growth in the world.

Illustration illustrating Absolute Return
The Vanguard 500 Index ETF (VOO) provided an absolute return of 150.15 percent for the ten-year period ending December 31, 2017, as an illustration from the past. Its 10-year annualised return during the same period was 8.37 percent, which was different from this. Additionally, the S&P 500 Index had an absolute return of 153.07 percent during that time, which was higher than the relative return of -2.92 percent.

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what is Absolute return and what are the advantages of Absolute return?

imptags : what is Absolute return, What does absolute return meaning, What is absolute return example, What is absolute return strategy, What is absolute return vs relative return, What is difference between absolute return and CAGR in mutual fund,What is absolute return fixed income,

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