Financial engineers for decades have sought to develop absolute-return investments, funds that make money every year, even during bear markets. Bernie Madoff understood the appeal of such reliable vehicles and gave investors what they craved.

Honest money managers have failed in their quest to deliver perfect absolute-return funds. But with investors desperate to avoid losses, fund companies are offering a wide range of absolute-return vehicles. One of the most ambitious efforts is a family of four funds introduced recently by Putnam Investments. The funds range from cautious to aggressive. At the tame end of the spectrum is Putnam Absolute Return 100 Fund ( PARTX), which seeks to outdo Treasury bills by 100 basis points annually, or 1 percentage point. Other Putnam funds aim to beat Treasuries by margins ranging from 3 to 7 percentage points.

Can the funds hit their targets? The odds for success this year are high. At a time when 3-month T bills yield 0.20%, the Putnam funds needn't take much risk to achieve their goals, and the portfolio managers are playing it safe. Putnam Absolute 100 has most of its assets in short-term investment-grade corporate securities. Putnam Absolute 300 ( PTRNX) also has short-term holdings that should meet the target, even if the markets remain difficult. The 500 and 700 funds take on only slightly more risk, owning some longer-term bonds. Those could sink in a bear market.

Putnam managers concede that their funds may not generate positive results every year. But they aim to hit their targets over market cycles of three to five years. Achieving the goal will become more difficult once Treasury yields rise back to normal levels. To hit the target, the funds will need to own more aggressive choices, including stocks, commodities and real estate investment trusts (REITs). No matter what the portfolio holds, the goal will always be the same: to reach the return targets while taking as little risk as possible.

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