Fund manager Abrdn is bringing down the curtain on its Global Absolute Return Strategies (Gars) fund, which was once of the UK’s largest investment funds.
At its peak, Gars managed £45 billion for investors. However, after years of poor returns assets have slumped to less than £900m.
The strategy has undergone a difficult few years, with management changes coming amid consistently off-target performance.
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The fund had targeted a return of cash plus 5% over a rolling three-year basis but failed to reach it, instead posting a loss of 9.43% over five years, according to Hargreaves Lansdown data.
Gars will now be merged into Abrdn's diversified asset funds.
The fund's closure is part of a wider reshuffle within Abrdn’s multi-asset team. Russell Barlow has been named as head of the new streamlined multi-asset and alternative investment solutions wing.
In a statement, Barlow said: “My focus during the strategic review was to clarify roles, reduce inefficiency and increase collaboration ensuring we deliver the best outcomes possible for our clients.
“The new structure simplifies our processes and facilitates a greater comparison of opportunities across asset classes rather than being focused on research within single asset classes and products. I’m confident this approach is best suited to the needs of our clients in delivering strong performance outcomes across a more relevant product range.”
“Part of the strategic review was also to determine how we best align our products with the current and future needs of our clients.”
Three additional “liability aware” absolute return funds are also set to close later this year.
Abrdn said the move “reflects our assessment of the demand from clients, and we regard the diversified assets funds as key to the development of our multi-asset business given the good performance over an extended period, a differentiated investment universe and a well-structured and repeatable process.”
The fund manager previously announced that the abrdn Smaller Companies Income trust is to merge with Shires Income Trust in an attempt to reduce the discount to net asset values of both trusts and lower costs for investors.
What fund should I pick?
The loss of what was once a mainstay of many portfolios raises questions about how best to select funds. This year, investors have sought technology exposure, given what’s been popular on fund platform interactive investor (ii).
Fundsmith Equity, Royal London Short Term Money Market, Vanguard LifeStrategy 30% Equity and Legal & General Global Tech were the most popular funds to buy in June, according to ii’s data.
Scottish Mortgage (SMT), City of London (CTY) and Greencoat UK Wind (UKW) were the three most popular trusts to buy but also look to MoneyWeek’s own portfolio of investment trusts. Its lineup of six London-listed trusts is based on exposure to a wide array of investment styles and asset classes - a factor crucial in inflation-proofing your portfolio.
As Kyle Caldwell, collectives specialist at ii said: “When it comes to exciting investment themes there’s always the danger of buying in too late or at a peak. To reduce risk, while it is more boring, having a well-diversified portfolio is the best way to over the long term give your investments ample opportunity to grow, while guarding against serious short-term losses, such as buying at a red-hot valuation that will ultimately prove to be unsustainable.”
“In addition, by being diversified your portfolio is positioned to benefit over the long term when a theme or a stock market has its moment in the sun,” he added.
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