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Wise Money: Using the Endowment Investment Approach to Minimize Volatility and Increase Control by Daniel Wildermuth

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11Absolute Return

THIS IS THE LAST MAJOR PERFORMANCE CATEGORY. I HAVE SAVED IT for last because it’s the least defined and most rapidly evolving. It can be a great portfolio addition, but it can also be difficult for investors to access. Fortunately, at least one investment approach, managed futures, is becoming more standard. But before jumping to this option, we will address the general subject.

Absolute return investing was conceptually identified as a distinct asset class by Yale University in the 1990s.1 The key aim was to produce equitylike returns with ultralow correlation to anything else. It’s not hard to see where the name came from, although some people assume that the absolute part of the name assumes losses aren’t possible. This ...

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