White Paper

Can Absolute Return Protect Against the Comeback of Volatility?

Richard Yasenchak, CFA Senior Managing Director, Head of Client Portfolio Management
Valerie Azuelos Managing Director, Product Specialist
Kevin Armstrong, CFA Managing Director, Consultant Relations

Key Ideas

  • Institutional investors face a dilemma: Given the multi-year strong rally in equity markets, the challenge today is to preserve those gains should volatility make a comeback.
  • Absolute return strategies hold the potential for improving portfolio efficiency and protecting on the downside, but the heterogeneity of this group of investments requires careful evaluation and application.
  • We show that by focusing on absolute return outcomes instead of categorizations you can glean practical insight into their use: how to fund them, how to identify true sources of diversification and how to set your own return expectations.


Today, global equity markets have risen substantially while volatility has reached historical lows. How much longer can this continue? The dilemma for investors is preserving those gains in equities should volatility return to
historically normal levels.