At the other extreme, there are funds that are not benchmarked. Instead, their objective is to target a particular return with a given risk level and a strong focus on capital preservation. This strategy is called "absolute return investing" and is largely adopted by hedged funds.
Absolute return managers can invest in any asset class anywhere in the world. Therefore, if the S&P 500 is falling significantly, absolute return managers can choose to allocate their money to a more favourable market like Europe and Asia, or even raise cash, to invest in another asset classes or invest short.
In a bull market, absolute return portfolios can under-perform against relative return portfolios. However, in the longer term when markets go through the cycle of boom and bust, absolute return portfolios tend to outperform as big losses are avoided during the bear periods.
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