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Laxman Pai, Opalesque Asia:

Traditional mutual fund managers will be interested in diversifying the investment solutions on their shelf by adding liquid alternative funds to their product line-up as Canadian Securities Administrators (CSA) implemented new reforms, says Scotiabank.

Aming at making liquid alternatives more readily available to investors in Canada, CSA issued a guidelines on the modernization of investment fund product regulation - alternative mutual funds last month.

The new rules open up hedge-fund-style strategies to the mass retail market, said the bank.

According to Scotiabank's white paper on alternative mutual funds in canada, the mass retail market in Canada is dominated by 15 large institutions that together control approximately 95% of the $1.33tn mutual fund market in Canada.

The paper said that in the U.S., a modernization of fund regulations in 2013 helped propel the assets under management (AUM) number for liquid alts. The AUM for these products was $225bn by 2017.

The U.S. market is 10 times the size of Canada's. But accounting for the scale, this neighboring example suggests that the liquid alts market there could grow by C$20bn over the next five years.

Industry analysts have suggested potential market penetration ranging from C$15bn to more than C$100bn. Even at the lower end of forecasted levels, liquid alts could comprise a meaningful portion of the market over the next few years.

Scotiabank said that i......................

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