Understand Absolute Returns

Investment and stock market lingo can be confusing sometimes, but it is important to know about the economy. Here is a brief tutorial on what absolute returns are!

Know that an absolute return is the return from an investment (ex. mutual fund) you receive over a specific period of time. Absolute returns compare the appreciation or depreciation of a particular investment with a percentage during this time period..

Know that an absolute return fund's goal would be to make positive returns on your investment by using a variety of management strategies that typically differ from your average mutual fund.

Realize that some of these absolute return fund strategies include options, futures, and using short selling. This form of mutual fund has become so popular that it is also known by another name. Absolute return funds are also called hedge funds.