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American Beacon, MFS Latest to Launch Absolute Return Funds

Plus, first-quarter fund performance highlights, and more.

Ryan Leggio, Fund Analyst, 03/31/2011

American Beacon and MFS are the latest fund companies to announce the launch of absolute return funds.

The number of funds launched under the absolute return label has increased dramatically over the past two years. In the Morningstar fund database, there are currently 30 funds that have "absolute return" in their name. Thirteen of those funds, or 43%, have launched in the past two years.

Although these funds have similar names, their investment strategies, asset class exposures, objectives and profiles, and fees can differ greatly. All of them want to avoid losing money over specified time periods, but some want to beat inflation, too.

All of them rely heavily on fixed-income securities.

MFS Absolute Return MRNAX is a fund that fits that profile. Manager James Calmas, who has been with MFS since 1988, and some analysts from MFS' Quantitative Solutions team will primarily invest in debt instruments and use tactical asset allocation to shift the fund's exposure to asset classes, markets, and currencies. The fund will charge 1.15% per year for its front-load share class.

The American Beacon Absolute Strategies fund will be subadvised by Brandywine Global Investment Management, LLC; Loomis, Sayles & Company, L.P.; and PIMCO.

It will be able to invest globally in fixed income, foreign currencies, and derivatives such as forward contracts, futures contracts, and options or swap agreements. It has no credit-quality restrictions, but American Beacon expects the fund to have no more than half of its portfolio exposed to high yield. The fund's front-load share class will charge 1.39% per year.

Quarterly Fund Performance Highlights
With the first quarter coming to a close, fund category returns have been impacted by the earthquake in Japan and the rise in oil prices and long-term Treasury yields, among others:

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