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Alternative Market Briefing

As asset flows to ETFs climb, hedge fund managers eye liquid alts

Thursday, July 30, 2015

Bailey McCann, Opalesque New York:

ETF assets are up $116 billion year-to-date as investors continue to drive up the use of these instruments, outperforming a range of options available. Assets in absolute dollars have increased by $265 billion over the past year, outpacing the $200 billion in long-term mutual fund (LTMF) assets distributed by retail channels, according to data released today by Broadridge Financial Solutions.

RIAs are leading this growth, accounting for some 87% of the increase in the year ending June 30, 2015. Through RIAs, total ETF assets accounted for some $496 billion – a $78 billion increase compared to the same period last year. The wirehouse channel moved into second place behind RIAs with total ETF assets of $397 billion, and a $70 billion increase over last year.

These data point to a major trend for mass affluent investors and could impact how hedge funds approach business decisions surrounding their liquid alternative product lines.

Total assets under management increased 14% for ETFs, and 6% for LTMFs during the year ending June 30, 2015.

Still, there is hope for managers distributing '40 Act funds. RIAs were also key distributors within this cohort, accounting for an increase of $130 billion in assets for LTMFs, outpacing all other retail channels. On the wirehouse side, mutual fund assets were up only $6 billion, one-half of 1 percent. ETF assets were up $70 billion, or 21 percent.

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