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Alternative Market Briefing

Fast growth of liquid alternatives fuels hedge fund fee discussion

Tuesday, June 24, 2014

Komfie Manalo, Opalesque Asia:

Liquid alternative funds continue to show fast growth, said hedge fund information provider Infovest21. In its latest report, Infovest21 said in 2013, net flows for alternatives were $40bn, up from $14.6bn in 2012. So far this year through April, net flows are at $11.6bn.

Lois Peltz, president of Infovest21 and author of the report, said, "Liquid alts are still very early in the game. Fees have to get lower and track records need to get longer so that target date or stand-alone options are comfortable adding liquid alts as an option. Lower fees and longer track records will make it easier for DC professionals to be objective when considering it for their portfolio."

However, the report said liquid alternatives are a small mutual fund category representing only $150bn in assets i.e 1.3% of all mutual fund assets. The asset growth has largely been dominated by a few large firms such as MainStay Marketfield in the equity long/short category and AQR in the managed futures category. Yet, a number of other funds have seen consistent growth and have over $1bn in assets.

Other asset raising stand-outs in the past year, in alphabetical order, include: Arden and Blackstone have both raised over $1bn with their respective Fidelity relationship. Avenue Capital's Avenue Credit Strategies Fund, a global credit fund, raised over $1.7bn. BlackRock Global Long/Short Equity is at the $1bn mark......................

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