What differentiates absolute return strategies from more traditional approaches? Dana Meissner of Federated Equity Management cites the emphasis on risk management as the key difference. In this video, he explains that absolute return strategies define risk as negative returns, or losing money, compared to traditional strategies which define risk relative to market performance.
Absolute return strategies have often been ignored over the last few bullish years, as a lack of corrections have put focus on comparing returns rather than comparing risk. As the market inevitably takes a bearish turn in the future, Meissner believes risk management will come to the fore, and absolute return strategies will become more attractive.