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A Go-Anywhere Fund That Can Handle Any Market

A Go-Anywhere Fund That Can Handle Any Market

Suzanne Hutchins.


Photograph by Kate Peters

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For many investors, not losing money is just as important as making more. The

BNY Mellon Global Real Return

fund excels at both.

The fund (ticker: DRRIX), managed by London-based Suzanne Hutchins, 53, aims to generate positive long-term, or “absolute,” returns, regardless of how the market has performed. “The objective…is to generate an absolute return of Libor or cash plus 4% over the longer term, and to help preserve capital on the downside,” she explains.

Libor, the London interbank offered rate, has been near zero since the 2008 crash, except for a small spike in 2018 and 2019—which means the $3 billion fund’s 4.2% annualized return in the past decade is close to its goal. It also beats 94% of its peers, many of which also seek absolute returns, in

Morningstar’s

Multialternative fund category. Throw in a 0.91% expense ratio—low for its hedge-fund-like category—and its appeal is apparent.

The U.S. version of the fund launched in 2010 after the 2008-09 bear market ended, though the British version of the strategy—largely identical except for its U.K. currency exposure—dates back to 2004. That strategy produced an impressive 4.8% return in 2008 when the MSCI All Country World Index of stocks fell 42% and the

S&P 500

index dived 37%. The U.S. fund has only had one down calendar year, a minuscule 0.01% decline in 2011.

One advantage of Hutchins’ strategy is its flexibility. The fund can invest worldwide in stocks, bonds, commodities, and precious metals without weighting constraints. It can also hedge, typically buying put options—financial contracts that give holders the right to sell securities at a predetermined price—in indexes such as the S&P 500 or the Euro Stoxx 50 to limit the downside. “We live in an ever-evolving investment environment, and you

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