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.
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.”
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More Stories on Liquid Alternatives
The Aspect Core Diversified Programme is offered in a daily-liquid, UCITS-compliant investment vehicle. Aspect Capital Limited, a London-based systematic hedge fund and CTA pioneer with $8.8 billion in assets announced Wednesday (July 21, 2021) its launch of the Aspect Core UCITS Fund. The new fund joins the Aspect Diversified Trends Fund and the Aspect Systematic…
Liquid Alternatives/ESG: CI Global Launches Mutual Funds And ETFs Focusing On Climate Change, Liquid Alt Strategies
CI Global Asset Management announced today the launch of two new equity funds – the CI Global Climate Leaders Fund, which focuses on firms leading the global campaign against climate change, and CI Alternative North American Opportunities Fund, which uses alternative strategies to invest in innovative high-growth companies.
BlackRock (NYSE: BLK) has introduced its Systematic Multi-Strategy ESG Screened fund in Europe. The new fund is categorized as Article 8 under the European Union’s Sustainable Finance Disclosure Regulation (SFDR). It seeks to provide a total return in the form of capital and income through three uncorrelated and complementary strategies.
The Franklin K2 Cat Bond UCITS Fund and Franklin K2 Athena Risk Premia UCITS Fund make their debut in the face of growing demand for investment opportunities in the liquid alternatives space. The two strategies offer diversification benefits to European investors because of their substantially less correlation to the traditional asset classes.
Emles Advisors announced last week the launch of the Emles Alpha Opportunities ETF (EOPS) which applies a long/short strategy while investing primarily in value stocks of North American companies with a focus on “old economy” sectors like industrials, consumer discretionary, and materials. The fund is trading on the CBOE BZX Exchange and applies an expense ratio of 1.75%.
JP Morgan Asset Management (JPNAM) and Thailand’s Kasikorn Asset Management have jointly created a sustainable liquid alternative fund called K-SUSTAIN-UI. To be distributed by Kasikorn Private Banking, the new product will invest in the JP Morgan Multi-Manager Sustainable Long/Short Fund. It gives investors a liquid alternative product with an ESG focus.
The Wilshire Liquid Alternative Index Returns 1.54% In April. That figure underperformed the 1.63% monthly return from the HFRX Global Hedge Fund Index in the month of April.
Formidable Asset Management, LLC announced the launch of the Formidable ETF (NYSE:ARCA: FORH), the firm’s first ETF product. The ETF is an actively managed, liquid alternatives portfolio diversified among multiple distinct strategies, including tail hedging, inside a single ETF.
A retail investor called up Inker in the middle of the night to berate him for his view that retail investors would be hit hardest when the market collapses. Writing on the incident in his Q1 2021 letter, Inker said investors, particularly newbies, should shift away from speculative growth stocks to value or liquid alternatives.
Canadian alternative asset manager Ninepoint Partners LP announced Thursday the launch of the Ninepoint Alternative Credit Opportunities Fund, a new liquid alternative mutual fund that will invest in Canadian, U.S., and international fixed income securities for short-term and long-term gains.
Liquid alternatives, also known as liquid alts, are mutual funds and ETFs that aim to provide investors with diversification and portfolio stability through alternative investment strategies. Alternatives include assets such as infrastructure, real estate, and commodities; alternative strategies, which use tools like short-selling or leverage to amplify returns and manage volatility; and private markets, which include equity, credit, infrastructure, or other categories. According to Mackenzie Investments, traditional portfolios should include a component of alternatives for diversification, protection, and steadier returns in today’s volatile markets.
Liquid Alternatives: Optimizing the 60/40 Portfolio Through Varying Market Conditions with Liquid Alts
Salvatore Bruno, Chief Investment Officer and Managing Director, IndexIQ; Kelly Ye, Director of Research, IndexIQ; and Dan Petersen, Director, Product Management, IndexIQ, delved at length on an environment characterized by volatile equity markets and low but rising interest rates. In a webcast titled “Optimizing the 60/40 Portfolio Through Varying Market Conditions with Liquid Alts,” they suggested liquid alternative ETFs as a fast-growing asset class offering the highest degree of liquidity among alternatives.
The Wilshire index provides a representative baseline for the performance of the broader liquid alternatives space. According to Wilshire Associates, the index aims “to deliver precise market measures for the performance of diversified liquid alternative investment strategies implemented through mutual fund structures, backed by a proprietary classification methodology.”
The Wilshire Liquid Alternative Index Returns 1.18% In February. That figure underperformed the 1.52% monthly return from the HFRX Global Hedge Fund Index in the month of February.
According to Matthew Yeates, Head of Alternatives and Quantitative Strategy, 7IM, current record low yields on bonds have made the 60:40 investing mantra an “anachronism.” Bonds provide neither the returns nor the benefit of diversification as a foil to the riskier and higher growth equity component in the portfolio. The solution is to incorporate alternatives into the investing mix.
Though many liquid alternative strategies have disappointed in recent times, investors can nevertheless create “interesting revenue streams” by combining various strategies. This they can achieve without locking their money up for up to 10 years, says Patrick Ghali, co-founder at hedge fund advisory Sussex Partners.
The Wilshire Liquid Alternative Index Returns 0.01% in January. This figure outperformed the -0.16% return from the HFRX Global Hedge Fund Index in the month of January. The Wilshire index provides a representative baseline for the performance of the broader liquid alternatives space.
Hercules Investments, a Registered Investment Adviser and asset manager, is harnessing the potential of a liquid alternative strategy to shield investors from the vagaries of a highly volatile stock market triggered by the pandemic. Furthermore, down the line, massive stimulus measures and deficit financing bring up the specter of rising inflation.
Liquid Alternatives/Private Equity: A Mackenzie Mutual Fund Offers Private Equity Exposure To Retail Investors
The Mackenzie Private Equity Replication Fund is a new mutual fund from Mackenzie Investments launched earlier this month. Mackenzie is active in liquid alternatives, and this is its sixth fund in that space. The fund manager expects liquid alternatives to grow to $100 billion in assets under management in Canada within the next few years.
The Wilshire Liquid Alternative Index was up 1.68% in December. The Wilshire index provides a representative baseline for the performance of the broader liquid alts space. This figure underperformed the 2.45% return from the HFRX Global Hedge Fund Index in the month of December.
The OYSTER Stable Return SICAV fund will provide investors with an all-weather strategy focused on delivering stable hedge fund returns to institutional and retail investors with competitive fees, daily liquidity, and transparency.
The fund aims to use liquid exchange trade products to replicate the portfolios of leading hedge funds. At an annual management fee of only 0.8%, the fund will use a proprietary replication process.
The index provides a representative baseline for the performance of the broader liquid alternatives space. This figure outperformed the 2.82% return from the HFRX Global Hedge Fund Index in the month of November.