More investment products need to be developed that actually
achieve an absolute return, according to Jeffrey Sargent from
bond specialist asset manager Pimco.
The executive vice-president Pimco Europe told the Irish Funds
Industry Association earlier this week during a CEO
roundtable that, prior to the financial crisis, much of the
product available had been traditional benchmark-based
investments - where asset managers would try to produce alpha
in excess of whatever the benchmark was.
He said: "Unfortunately, over an extended period of time, not
only [did] benchmarks produce negative returns but often the
alpha component [of the fund] was also producing negative
"So this has created a great deal of fear and risk aversion in
the marketplace and caused investors to rethink [whether] they
have the tolerance for the type of volatility and extended
period of below-expectation returns to get through a
"We have then seen much broader...