What the fund that beat the crash is buying now: Argonaut Absolute Return

As investment funds dived in the first three months of 2020, FP Argonaut Absolute Return managed to deliver a 23 per cent return to investors.

Absolute return funds are meant to do what they say on the tin and make money for investors in the bad times as well as the good, but many have been left disappointed over the years.

This time round, the Argonaut fund pulled the trick off and then some in the first quarter of the year when it became the top-performing fund.

On this episode of the Investing Show, we speak to manager Barry Norris to ask him how the fund not only weathered the storm but turned a big profit – and what he is investing in now.

As an absolute return fund manager, he is free to invest in almost anything he likes and can go both long and short of companies – backing those he things will do well and selling those he thinks will suffer.

This is definitely a ‘don’t try this at home’ school of investing and it is often the case that absolute return funds carry high fees and relatively low returns.

Argonaut Absolute Return certainly has a high ongoing charges figure, compared to a standard investment fund, of 2.26 per cent. 

It is up 21 per cent year-to-date and has returned 30 per cent over one year, 46 per cent over three years, but just 15.1 per cent over five years.

Those figures compare to sector averages of – 3.9 per cent year-to-date and -1.2 per cent, -0.6 per cent and  2.7 per cent over one, three and five years, respectively.

Barry explains how he thinks the recovery will unfold, what shape it will be and why he decided to buy shares in Zoom last November. He also discusses why an investor would consider buying into an absolute return fund after the market has crashed and its protective cloak may no longer feel necessary.

> Further reading:  Since the stock market crash I keep reading recommendations for defensive and balanced funds – but surely it’s too late for that?

The performance of the Argonaut Absolute Return fund (purple) compared to the average in the sector (orange) over the past six months