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Alternative Market Briefing

Oaktree co-founder Howard Marks downplays liquid alternative funds performance

Thursday, March 26, 2015

Komfie Manalo, Opalesque Asia:

Oaktree Capital Group co-founder Howard Marks downplayed the "promise" of liquid alternative funds and said that the asset class is not reliable to deliver stable positive performance, reported Bloomberg.

The 68-year-old hedge fund manager was quoted as saying in his latest quarterly letter, "They’re supposed to deliver performance comparable to other alternative investments without the illiquidity they entail. To me it sounds like just one more promise of something for nothing."

Oaktree, the world’s biggest distressed-debt investor, founded in 1995, oversaw $90.8 billion as of Dec. 31.

He added the impact on liquidity of ETFs, liquid alternatives and new rules designed to stop banks from trading with their own money has yet to be tested, said Bloomberg. He warned that to assume that liquidity during good times will be the same as when the markets fell, is dangerous.

"We’ll see what happens in the next serious downturn," he said.

However, results of the Wilshire Liquid Alternative Index, which provides a representative baseline for how the broad liquid alternative investment category performance, outperformed its investable hedge fund index counterparts in 2014 with a 1.55% fi......................

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