Liquid Alternative investments have emerged over the past decade as one of the fastest-growing areas within asset management. As pensions, endowments, foundations and other institutional investors have long benefited from Alternative Investments within their portfolios, Liquid Alternatives enable investors to have access to alternative investment strategies in fund structures that provide daily liquidity, full transparency, low investment minimums and other key attributes for investors. DailyAlts is your source for the most up-to-the-minute news, commentary and analysis on the global market for Liquid Alternatives.
European investors, both retail and institutional, are showing a growing interest in hedge funds and alternative investment options, as indicated by recent findings from Cerulli Associates. In the UK, Italy, and Switzerland, there’s a notable preference for semi-liquid funds for private market investments, with 50% of UK wealth managers favoring this approach.
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More Stories on Liquid Alternatives
Goldman Sachs Group Inc. (NYSE: GS) is implementing computer-driven algorithms to manage its Multi-Manager Alternatives Fund, replacing external money managers. The move aims to reduce fees and revive the fund’s diminishing assets. The fund’s name will be changed to Goldman Sachs Multi-Strategy Alternatives Fund.
As bonds failed to provide protection in 2022, investors have turned to liquid alternatives, which offer exposure to asset classes or investment strategies that are considered alternative to traditional assets with similar liquidity profiles. Examples include hedge funds, commodities, and REITs.
According to Alan Polley, a portfolio manager at Pendal, it is time to consider moving from illiquid alternative investments to liquid alternatives. Polley believes that illiquid assets, which have been benefiting from a falling interest rate environment, are no longer supported by a tailwind, and the rising interest rates are creating headwinds for these assets.
Liquid Alternatives: Allspring Global Investments Recommends Liquid Alternatives As Foil To The 60/40 Portfolio
Allspring Global Investments is expanding in Asia to meet rising demand for multi-asset strategies from wealthy investors and institutions looking to minimize risk after both equities and bonds fell last year. The US asset manager suggests allocating more to liquid alternatives, which provide quick liquidity and behave differently from traditional asset classes.
Man Group (LON: EMG), one of the largest publicly traded hedge funds, has reported higher pre-tax profit in 2022, up from 2021, and raised its core net revenue by 14%. The UK-based asset manager has said that it expects more demand for liquid alternative strategies this year after delivering positive returns for investors from the strategy in 2022.
Panagram Structured Asset Management, a subsidiary of Eldridge, has launched its first ETF, the Panagram BBB-B CLO ETF (NYSEARCA: CLOZ).
Investors can hope to generate steady income and as well participate in outsized equity market moves with DIPC, a product that is an alternative to the traditional but currently underperforming 60:40 portfolio. FundFront last month launched DIPC in partnership with Dipsea Capital to offer the latter’s tactical relative value strategy by trading a basket of short-dated U.S. equity options and momentum stocks.
Arrow Capital Management, a Canadian alternative investment company, has launched its third actively managed exchange-traded fund (ETF) series with the Arrow Canadian Advantage Alternative Class (TSX: ACAA), a liquid alternative strategy investing in equity, fixed income, currency and commodity markets.
Liquid Alternatives: Simplify Launches Two New Income ETFs With Low Correlation To Credit And Duration Risks
Simplify Asset Management as launched two new ETFs designed to enhance portfolio yield without significant credit or duration exposure, and which use sophisticated option-writing algorithms to enhance returns.
George Matthews is a managing director and co-head of Product for the Systematic Edge Equity team at Allspring Global Investments. In this capacity, he leads global institutional product direction for the Systematic Edge platform. George specializes in factor-based investing and serves as a senior product specialist for the team’s equity group.
Canadian fund manager Purpose Investments Inc has launched the Purpose Cash Management Fund on the Toronto Stock Exchange. The yields on the fund investments are expected to rise in tandem with the rate hikes to be implemented by the Bank of Canada in its effort to tame inflation.
Liquid Alternatives: Bobby Blue, Senior Manager Research Analyst, Morningstar, On The Rising Inflows Into Liquid Alts
As equities and bonds suffer in a challenging macroeconomic environment, liquid alternatives have made a comeback. Investors are plowing money into strategies such as managed futures, volatility, long-short equity, and more. Since last year, as bonds and stocks stumbled, inflows have surged into liquid alternatives. Liquid alts are mutual funds, closed-end funds, and ETFs that invest in alternative investment strategies offering downside protection and diversification opportunities while providing daily liquidity which makes them accessible to all investors.
Affiliated Managers Group, Inc. (NYSE: AMG) is a leading partner to independent active investment management firms globally. AMG’s strategy is to generate long-term value by investing in a diverse array of high-quality independent partner-owned firms. The company’s Q2 Earnings Call on Monday, August 2, had some valuable takeaways for alternatives investing, particularly liquid alternatives.
There is a spike in inflows into liquid alts funds during 2022. According to a 2019 study by Greenwich Associates, liquid alts then had a market share of 4% among institutional investors, ranging from a high of 6% among public pension funds to a low of 2% among corporate programs and outsourced CIOs in the…
Rising interest rates, runaway inflation, and geopolitical turmoil have combined to ruin the pitch for the go-to 60/40 portfolio allocation between bonds and equities. Result: Advisors are leaning increasingly towards alternative investments and portfolio allocations to such products have risen sharply this year, according to a study by Cerulli Associates.
As the standard 60/40 portfolio allocation looks increasingly shaky, a hunt is afoot for alternative products, and liquid alternatives are tracking higher on investors’ radar. Fidelity Investments launched last week the Fidelity Macro Opportunities Fund (FAQFX) and Fidelity Risk Parity Fund (FAPZX), two new mutual funds marking the firm’s foray into liquid alternatives.
On July 12, the RiverNorth Enhanced Pre-Merger SPAC ETF (NYSEARCA: SPCZ) commenced trading on the NYSE. Launched by RiverNorth Capital Management, LLC and TrueMark Investments, the actively managed fund invests in pre-merger securities of SPACs (Special Purpose Acquisition Companies) whose business plan is to raise capital in an Initial Public Offering (IPO) and, within a specific period, engage in a merger or acquisition with one or more unidentified companies.
Lukas Strobl, editorial manager for EMEA at Morningstar, interviews Francesco Paganelli. The topic: Liquid alternatives as a “hedge fund-lite” kind of strategy.
Picton Mahoney Asset Management launched the new Picton Mahoney Fortified Alpha Alternative Fund earlier this month. A liquid alternative fund, it is available in five classes of units, namely, Class A, Class F, Class FT, Class I and ETF units, and aims to provide consistent long-term capital appreciation to unitholders with an attractive risk-adjusted rate of return.
Unigestion, the Geneva-headquartered, independent, asset management company specializing in risk-managed equity portfolios and alternatives, has launched a global macro fund within its liquid alternatives cross-asset range.
CI Global Asset Management announced on Monday the launch of six ETFs, one of which is an alternative fund that is also offered as a mutual fund. The CI Alternative Diversified Opportunities Fund is a liquid alternatives mutual fund sub-advised by Marret Asset Management Inc., a fund management team with deep experience in alternative fixed-income strategies.
Blueprint Investment Partners have issued a report analyzing the performance of liquid alternatives across major market drawdowns, given the fact that demand for these products has materialized into a 300% increase in U.S. liquid alternative mutual fund and ETF assets since Q3’07. The report finds that despite their perceived success, liquid alts face challenges such as high expenses, tracking error and clients’ propensity to exit these strategies in the face of bull markets.
Spawned after the 2008 financial crisis, liquid alternatives have disappointed investors. During the 2010s, these instruments averaged an annualized gain of 1.66%. Writing in Morningstar, columnist John Rekenthaler makes a telling comment in his article Liquid Alternatives Funds: Is There Any Hope?: “The concern lies when the hedged investment trails high-quality bonds, as has been the case with liquid alternatives funds. In that case, why bother with trickery? You could just hold Treasuries instead.”