Video: Due Diligence is Critical for Investing in Alternatives

Due diligence is especially important for liquid alternative investments, and institutional investors should employ alternative specialists to perform due diligence on liquid alternative funds, according to Walter Davis, Alternative Investment Strategist at Invesco. In a video interview with InvestmentNews, Davis says that just because an alternative strategy is packaged in a mutual fund doesn’t mean it will behave like a traditional mutual fund, so mutual fund analysts shouldn’t be counted on to perform due diligence on alternative funds.

Marc Socol, Director of Elite Access Sales at Jackson National Life Distributors, agrees. He says, “If you look at long/short equity over the past five years, the gap between the best performer and the worst performer is 22%.” By contrast, the performance gap among large-cap value managers was just 10%.

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