Many advisers put their clients into absolute returns funds because they know intuitively that it is the right thing to do, says Professor Les Balzer. But often advisers have no real scientific reason to back up that intuition.

Balzer was the guest speaker at a HFA breakfast briefing yesterday, at which he explained that there is now “sound financial theory” to prove that intuition is right.

Balzer argues that while asset allocation based on the principals of Modern Portfolio Theory looks very scientific and very financially sound, he has reservations about the current methods of constructing portfolios. In particular, he says measuring ma...