What’s the difference between a multi-alternative fund and a world allocation fund? Investors want to know, since Morningstar distinguishes between the two fund styles that are both broadly considered to be “multi-asset” funds. According to William Blair’s Brian Singer, world allocation funds are “a bit more traditional or balanced” than the typical multi-alternative fund, which can “go anywhere” with highly opportunistic strategies. World allocation funds, by contrast, typically invest in a wide range of global securities, but do so predominantly to the long side – whereas multi-alternative funds usually practice long/short strategies across a wide range of asset classes that give them a lower correlation to most markets.
There is a good degree of overlap between multi-alternative and world allocation styles, according to Singer, but the more important overlap is the one between world allocation and other asset classes, which is not what most alternative investors are looking for.