Melbourne-based absolute return manager K2 Asset Management plans to lower its minimum investment to attract retail clients.

K2, which has in the past catered only for wholesale investors, yesterday said it would reduce its minimum investment to $20,000 from $50,000.

The manager said retail investors were increasingly interested in pursuing long/short, absolute return-style techniques.

"Wholesale investors have long realised the protection that absolute return funds can provide, but retail investors are becoming more interested in the strategy," K2 chief investment officer Mark Newman said. 

He said absolute return strategies attracted investors who relied on an income from their investments, but who could not afford periods of negative return.

"One of the great flaws of long-only strategies, which invest relative to an index, is that a manager can outperform the index yet still produce negative returns," he said.

"Long/short strategies come into their own in volatile markets and can still produce strong returns when the index is well in the negative."

The decision to market the fund to the retail market was taken after K2 took over from Equity Trustees as responsible entity for its funds.

"K2 has grown significantly in recent years and we now have our own dedicated legal and compliance staff to manage the responsible entity role, which will also result in cost savings for investors," Newman said.

K2 appointed former BT Financial Group head of national sales strategy Andrew Hall as head of distribution in August.