Absolute return

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Absolute return is the return on an asset over a certain period of time. It is usually expressed as a percentage of the invested capital. It differs from relative return in that it is concerned with the return of one particular asset without comparing it to any other measure or benchmark.

Mutual funds generally use a relative return approach to investing, in which they try to produce returns that are better than those of competing funds or the market as a whole. An absolute return fund uses different investment management techniques from a traditional mutual fund, for example short selling, futures, options, derivatives, arbitrage, and leverage.

Many hedge funds use absolute return strategies.