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Christine Johnson Benedicte Gravrand, Opalesque Geneva:

Liquid alternatives (liquid alts) are alternative investment strategies that are available through alternative investment vehicles such as mutual funds, ETFs, closed-end funds, etc. that provide daily liquidity. Launches of liquid alts funds have tripled since 2009 and are predicted to reach $2 trillion. Among the drivers of such growth, we can count the 2008 crisis, which changed investors’ priority from returns to diversification and downside protection; a rethinking of the traditional stock/bond portfolio in a low interest rate and slow economic growth environment; and a host of new liquid alts products. The Credit Suisse Liquid Alternative Beta (LAB) Index was up 2.63% in February (2.32% YTD and 3.60% in 2014).

According to the participants at the recent Opalesque Liquid Alternative Roundtable, investors are indeed now making risk allocation rather than asset allocation decisions. Furthermore, there are now more liquid alts products on offer, which are of better quality and easier access. However, it is still early days for the space, as fund companies are still experimenting with the structure and advisors wou......................

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