What does the term 'absolute return' signify in investment strategies?

The term 'absolute return' signifies investment strategies focused on achieving a positive return regardless of market conditions. This approach is particularly appealing to investors looking for consistent performance, as it does not rely on relative comparisons to market indexes or benchmarks. Instead, absolute return strategies aim to deliver gains in various market environments, including up, down, or sideways trends.

This emphasis on generating positive returns means that these strategies may employ various tactics, such as long and short positions, to achieve their objectives. The flexibility in investment approach allows managers to capitalize on opportunities and mitigate losses, providing a more stable return profile over time.

Other options focus on different aspects of investment strategies. Guaranteed returns suggest a certain outcome, which is usually not applicable in the context of absolute return strategies. Tying returns to benchmarks reflects relative return strategies where performance is compared against a specific market index. Lastly, bond yields do not pertain to the concept of absolute return in the investment strategy context, as they are more specific to fixed-income securities.