In an S&P survey about managers’ intentions for fund launches this year, 38% said they were likely to launch absolute return funds, 35% are planning alternatives funds, and 32% are planning 130/30 launches. Property and energy funds were the least popular, with just 14% and 8% of managers saying they were considering them, respectively. 'Absolute return funds have grown in popularity as investors have sought products designed to perform regardless of the general stock market direction,' said Randal Goldsmith, a fund analyst at S&P Fund Services. 'Many specialist/alternatives funds invest in asset classes that are either independent of stock market conditions (such as commodities and currencies) or show low correlation (such as property and private equity).

'While the standard 130/30 fund will follow the general market direction, since alpha is leveraged it should continue to perform in modest setbacks and hold up relatively well in severe corrections.' Despite the increase in market volatility since the credit crunch began, fund managers have not delayed or reduced the number of funds they intend to launch in 2008. Around 79% of respondents said that their planned fund launches were 'continuing as normal'. Only 12% said they had delayed fund launches, with 6% saying they had reduced them in number.