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Alternative Market Briefing

Study: Liquid alts outperform hedge funds in 2014

Friday, April 24, 2015

Bailey McCann, Opalesque New York:

New research from Preqin shows that liquid alternative products outperformed hedge funds in 2014. According to the report, the average alternative mutual fund delivered returns of 4.36% over the course of 2014, compared to 3.78% for single-manager hedge funds.

These funds have a lower minimum investment than single-manager funds, $190,000 and $1.3mn respectively, as well as lower management fees on average (1.04% compared with 1.55%). With lower barriers to entry, and superior performance in the past 12 months, these regulated and liquid products are proving attractive to retail clients and institutional investors alike.

UCITS, the European counterpart to mutual funds are also gaining in popularity with both retail and institutional managers, report data shows. There are almost 800 UCITS products on the market, with 64 of them launching last year. There are fewer liquid alternatives in the market - some 348, with 53 having launched last year.

While not every hedge fund strategy fits neatly into one of these wrappers, the ones that do tracked well with the prolonged equities rally in the US and muddled through the ongoing European slowdown.

Delegates at our recent Opalesque Liquid Alternatives Roundtable noted during that event that liquid alternatives are still in the early stages of development, so the potential for o......................

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