Even as some asset managers continue to expand their alternative platforms, others are cutting back or even pulling the plug entirely. Virtus Investment Partners, which launched a trio of alternative mutual funds with Cliffwater LLC back in April 2014, recently liquidated all three. Those funds were:
- Virtus Alternative Total Solution Fund (MUTF:VATAX)
- Virtus Alternative Inflation Solution Fund (MUTF:VSAIX)
- Virtus Alternative Income Solution Fund (MUTF:VAIAX)
All three funds were “outcome oriented” and designed to be used by advisors to address the specific needs of individual clients:
- The Virtus Alternative Total Solution Fund pursued long-term capital appreciation and low correlation through a multialternative strategy that included allocations to convertible arbitrage, global macro, long/short equity, long/short credit, MLPs, and infrastructure and real estate strategies.
- The Virtus Alternative Inflation Solution Fund sought returns that exceeded the rate of inflation. It pursued this investment objective by combining commodity, infrastructure, MLP, real estate, and long/short credit strategies.
- Virtus’s Alternative Income Solution Fund tried to maximize current income while also seeking capital appreciation. Its investments included derivative instruments like swaps and forwards, as well as ETFs.
Unfortunately, the three funds failed in meeting their clients’ needs in 2015, as all three posted significant losses for the 12-month period:
- The Total Solution Fund lost 5.99%,
- The Inflation Solution Fund lost 10.84%, and
- The Income Solution Fund fared worst of all, with 2015 losses of 11.15%.
For the year ending December 31, 2015, VATAX, VSAIX, and VAIAX ranked in the bottom 18%, 4%, and 3% of their respective categories.
Cliffwater was a sub-advisor to all three funds. Other sub-advisors to one or more of the funds included Mast Capital Management, Ice Canyon, Lazard Asset Management, LaSalle Investment Management Securities, Brigade Capital Management, Harvest Fund Advisors, Credit Suisse Asset Management, Fischer Francis Trees & Watts, Ascend Capital, and Graham Capital Management.
Despite the fund closures, Virtus still offers a wide range of alternative funds, including the 5-star rated Virtus Global Real Estate Securities Fund (MUTF:VGSAX) and the more recently launched Virtus Multi-Strategy Target Return Fund (MUTF:VMSAX). The latter fund is sub-advised by Aviva Investors who’s team is led by Euan Munro. During his tenure at Standard Life Investments, Munro was the architect of the well known and successful Global Absolute Return Strategy.
Jason Seagraves contributed to this article.