What Is Absolute Return Theory? Three Ways You Can Try It

Most investors are familiar with tracking an index for relative returns. Absolute return theory is a more intentional and sophisticated approach to investing.

A woman uses a calculator while sitting at her desk.
(Image credit: Getty Images)

When you consider investing in the market, your mind probably goes to low-cost index funds. Even a small amount of money can be invested and gain exposure to a significant amount of diversification.

In the words of Warren Buffett, “Diversification is only required when the investors do not understand what they are doing.” For those who don’t have time to research each investment or don’t want to manage their portfolio on a daily basis, buying and holding low-cost mutual funds and ETFs can be a great option.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Mike Decker, NSSA®
Author, Wealth Planner and Money Manager, Kedrec LLC

Mike Decker is the author of the book How to Retire on Time, creator of the Functional Wealth Protocol, and the founder of Kedrec, a Registered Investment Advisory firm located in Kansas that specializes in comprehensive wealth planning and management at a flat fee. He specializes in creating retirement plans designed to last longer than you™, without annuitized income streams or stock/bond portfolios. In addition to helping people achieve their financial goals, Decker continues to act as a national coach to other financial advisers and frequently contributes to nationally recognized publications.