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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Europe’s First and Only Medical Cannabis UCITS ETF To Launch Next Week. It will also be the first European ETF from Purpose Investments, the Toronto-based asset manager and ETF issuer. The Medical Cannabis and Wellness UCITS ETF (CBSX GR) will trade on Deutsche Börse’s Xetra. It is the first UCITS ETF to deliver targeted exposure to the fast-growing medical cannabis industry.
Franklin Templeton added a new active fund to its ETF range. The Franklin Liberty Systematic Style Premia ETF (FLSP) is an alternative ETF that is actively risk-managed, seeking a target annualized volatility of 8 percent, and targets four style factors: quality, value, momentum and carry.
The FLSP fund seeks to deliver absolute return (positive returns in rising or falling markets) by employing a multi-asset, long/short strategy.
ETF assets could hit $50 trillion by 2030, a figure that is more than ten times current levels, according to Bank of America. The bank also said this week that these assets may hit $5.3 trillion by the end of 2020 (Note: total assets are $4.3 trillion as of this publication date).
Alternative Risk Premia (ARP) funds passed their initial test during the correction in the last quarter of 2018, says Cambridge Associates.
Research by Cambridge Associates shows that Alternative Risk Premia (ARP) funds, which are a kind of hedge fund alternatives, returned -4% during the market correction in the last quarter of 2018. In contrast, equities returned -13.7%, and equity hedge funds returned -9.3%.
By this measure, ARP funds appear to have passed their first test.
Quantitative funds are lagging behind the major stock market indexes in 2019.
The market is heading towards its best year since 2013, but those funds managed based on investment factors have not kept up with the indexes. According to a recent report from Bank of America research analysts, large-cap funds managed using quantitative analysis are lagging the indexes buy an average of 3.2% for the year, and only 11% of these funds have managed to outperform.
YTD Returns for Alternative UCITS Strategies Swing Dramatically from 2018. About 80% of alternative UCITS funds generated positive returns until end-October, with nearly all strategies doing well.
According to HedgeWeek, the LuxHedge Global Alternative UCITS Index has gained 3.22% year to date in October 2019, indicating the average fund in this space is in positive territory.
In 2019, global ETF assets have added $840 billion from January 1st through October 31st, bringing the tally to a record $6 trillion.
According to EPFR, ETF AUM (assets under management) have grown six-fold in the decade since the global financial crisis. Interestingly, assets added $1 trillion every year since 2016. Which ETFs raked it in thisyear?
The size of the Indian mutual fund market is currently about $ 390 billion. According to Manulife’s Dommermuth, India will be the fastest-growing mutual fund market in Asia. Within three years it will surpass $600 billion in size and overtake Japan to become the second-largest mutual fund market in the region.
The SEC has proposed new rules on the use of derivatives by mutual funds, ETFs, and closed-end funds. The new rules would also impact business development companies. The new rule would provide an updated and more comprehensive approach to the regulation of funds’ derivatives use.
The leaders of investment platforms at the $339 billion investment manager Neuberger Berman discussed the investment environment through 2019, and the key trends they expect in 2020. Liquid alternative investments made it to the list of the top 10 investment themes in the coming year.
Erik Knutzen, Chief Investment Officer-Multi-asset Class, and Anthony D Tutrone, Global Head of Alternatives, weighed in on liquid alternatives.
Charles Schwab and TD Ameritrade could merge, according to CNBC’s Becky Quick. News of a possible deal dropped on Thursday morning.
Active fund managers will soon get to join the passive party via “stealth” ETFs.
The SEC has granted asset managers T. Rowe Price, Natixis, Fidelity, and Blue Tractor preliminary regulatory approval to launch non-transparent ETFs. These new ETFs require their holdings to be declared quarterly, instead of daily.
International Monetary Fund analyst Laura Kodres warns that investors are putting too much faith in mutual funds. According to Deutsche Bank, half of the high-yield asset funds could experience liquidity shortfalls in a market panic.
Goldman Sachs Asset Management tweaks a money management fund for ESG, especially diversity.
Goldman Sachs is heeding the ESG clarion call from investors. The asset manager has introduced environmental, social, and governance criteria in a Euro money market fund.
The Low Volatility NAV money market fund has been “enhanced” for ESG considerations via a two-fold strategy.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has had a dream run so far, but it may be time to cash in.
An article by Harrison Schwartz in Seeking Alpha makes a case for divesting holdings in the EMB ETF or even going short on it. The main risk: A default contagion emanating from emerging markets on unsustainable dollar-denominated debt.
The Chinese mutual fund market could jump 10-fold over the next decade. This prediction comes from Hua An Fund Management portfolio manager David Hu. The manager said that index-tracking mutual funds could reach 6 trillion Yuan in 10 years (or $857.29 billion.)
A study commissioned by IndexIQ reveals that there could be a surge in institutional interest in liquid alternative ETFs. This trend could push up their assets to $114 billion, or double their current value, in the coming 12 months.
The National Bureau of Economic Research issued a stark warning about bond mutual funds and risk. In a new report, NBER says that at least 30% of bond mutual funds hold riskier assets than what Morningstar reports. The agency released this warning in a report titled “Don’t Take Their Word For It: The Misclassification of Bond Mutual Funds.”
Picton Mahoney Asset Management will acquire a clutch of alternative investment funds from Vancouver-based Vertex One Asset Management Inc.
Picton Mahoney will henceforth function as the investment and portfolio manager of the following funds, with strategies given alongside.
Toronto-based Waypoint Investment Partners launch their first liquid alternative mutual fund.
The Waypoint All Weather Alternative Fund is a defensively-oriented mutual fund. It combines a portfolio of capital distributors and capital compounders with a put option overlay to shield from market drawdowns.
Man Numeric have appointed John Lidington as co-portfolio manager of its liquid private equity strategy alongside existing portfolio manager Charles Liu.
Liquid private equity may sound like a contradiction in terms. However, Man Numeric invests in small, listed companies that mimic the profile of a typical private equity portfolio.
Therefore, the strategy seeks to generate returns (and carry risk) similar to that of a buyout fund. However, the investor gains from vastly better liquidity and much lower costs.
JP Morgan suggests that retail investors and consumers are losing confidence in the U.S. economy. The bank cited the outflows of capital from the equity markets and the rush of capital into bonds as a reason. In 2019, $683 billion has moved into bond funds. Meanwhile, stock funds have seen outflows of $177 billion. These figures come from the Investment Company Institute, EPFR, and Bloomberg.
Fidelity Investments announced Thursday that it is eliminating commissions for stock trading. The elimination of commissions will also include exchange-traded funds (ETFs) and options. The firm is the latest in a long line that has cut fees to zero as the discount broker wars continue.