3 FUNDS TO WATCH

1 Perpetual Diversified Real Return Fund

The strategy aims to deliver rolling five-year returns of CPI plus 5%pa. As a guide, the fund aims to deliver an asymmetric outcome of two-thirds of the return of a typical balanced fund in strongly rising risk markets with one third of the drawdown in falling risk markets. The fund provides investors attractive exposure to asset classes that are otherwise difficult to access, especially around hedging strategies.

2 BMO Pyrford Global Absolute Return Fund

The fund aims to provide a stable stream of real returns over the long term, with a focus on low absolute volatility and significant downside protection. It employs a global multi-asset strategy to achieve its target of total return of 4% or higher versus the Australian CPI (before costs and tax). The fund has three goals: preserve capital (not to lose money in a 12-month period); beat inflation by a significant margin over the long term; and deliver returns characterised by low absolute volatility.

3 Janus Henderson Global Multi-Strategy Fund

This will suit investors who are concerned about price volatility risk in traditional asset classes and who wish to reduce correlation to equity markets, bonds and certain alternatives asset classes in their portfolio. This fund is absolute-return focused and seeks out cash plus 7%pa (gross of fees) and has achieved this since 2012.

Therefore, before investing you must convince yourself of the rationale behind the factor(s) you have chosen for your portfolio and why you believe these will persist in the long run. And chopping and changing between factors is probably not the best idea; discipline is one of the keys to being a successful investor.