It’s a quiet, snowy Thursday here in NYC. The office is buzzing with deadlines and on-boarding new clients and projects. However, the weather has provided me some civilized time, post holidays, allowing me to ease back into full throttle. A majority of our focus Q4 (resulting in new clients) is within a space called Liquid Alternatives. This label is used to describe mutual funds that employ a hedge against the down-side, or are of a more unusual asset class. The descriptor “Liquid,” reflects the ability to get in and out of these funds daily, and “Alternatives” as in stocks or bonds with a twist, or a less mainstream asset class.
Institutions currently allocate approximately 25% of their portfolios to alternative asset classes. Smart advisors and educated, self-directed investors tend to follow the institutional lead. Currently, individual investors allocate less than 5% to alternatives.
This presents an enormous opportunity for the fund industry, including alt
ETFs.Much of this bifurcation has been attributed to access. Institutions can allocate, and have access to hedge funds, most individuals can not. Liquid Alts are the simplest solution for exposure to these alternative strategies. In 2014, they are even finding their way into the vast assets of retirement vehicles such as 401ks.
Below is some of what we have read worth sharing on the topic.
Running the Fund: Considering the Hedge?
http://www.plansponsor.com/MagazineArticle.aspx?id=6442495681&magazine=6442495660
Plan Sponsor Magazine reviews some of the estimates that Liquid Alternatives could achieve in AUM (assets under management) over the next few years. Much of this is from industry estimates.
Seeking safe havens? Analysts, advisors point to Liquid Alternative funds.
http://www.cnbc.com/id/101188025#_gus
Adding a hedge after a large move in the equity markets seems to be a consensus reallocation.
Alternatives in DC Conference:
http://conferences.pionline.com/conference/alternatives-in-dc/2014/agenda
The prestigious Pensions & Investments is hosting a conference on what else, Liquid Alts. Who better to assemble experts and vendors to explore how to integrate alts into 401ks.
Hedge Funds Compete with Liquid Alts in RIA Market
II’s take on how hedge funds, post JOBS Act can directly compete with Liquid Alts and other mutual funds in the RIA channel
And the final post of what we are reading in Liquid Alts-land is a quick post on how AUM is growing with real stats. The proof is in the numbers and AUM talks, speculation walks.
Liquid Alternative Mutual Funds Continue to Gain Assets:
http://dailyalts.com/liquid-alternative-mutual-funds-continue-gain-assets/