What is an absolute return strategy in hedge funds aimed at?

An absolute return strategy in hedge funds is primarily focused on achieving positive returns regardless of market conditions. This approach emphasizes the goal of generating a profit irrespective of whether the markets are rising or falling, hence the term "absolute return."

This strategy is particularly appealing to investors who seek to hedge against market volatility or downturns, as it does not rely on traditional market movements to yield profits. Through various investment techniques, such as long/short equity, market neutral strategies, and tactical asset allocation, hedge funds employing an absolute return strategy aim to minimize losses during adverse market periods while still capitalizing on profitable opportunities.

The focus on achieving positive returns in all market environments distinguishes absolute return strategies from other investment approaches that may be more dependent on favorable market conditions for success. This makes absolute return strategies a vital consideration for investors looking to diversify their portfolios and decrease risk exposure.