'Absolute return' sector gets watered-down new name in 'farcical' change We will keep a close eye on performance and, should it become necessary, set performance criteria, which could lead to a fund's expulsion from the sector on performance grounds. Under other changes announced by the IMA, all funds in the absolute return sector will, as a minimum, have to target positive returns in any market conditions. They may choose to set more demanding targets. Whatever target they set, it must be specified explicitly," it added. All funds in the sector must state a time frame over which they are aiming to meet their specified target. The target may not be longer than three years. Patrick Connolly of AWD Chase de Vere, the advisory firm, said: "Absolute return funds have been popular in recent years as investors have looked for protection from volatile stock markets. [But] it is likely that many investors in absolute return funds don't understand what they have bought. The name absolute return gives the perception of security and implies that funds will give positive returns in all environments. The reality is entirely different and while many funds do achieve cash-like returns they do it with much higher charges, often including performance fees which are earned for beating a notional benchmark which could be less than 1pc per annum. A year ago the Financial Services Authority said sales of absolute return funds were of "potential concern" because of complexity, the suggestion of guarantees and the amount of money they were attracting.