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Liquidity is aim of the game in Alternative Strategies – Multi-Asset Sector

05 Jul 2012
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Fund-of-hedge-fund (FoHF) strategies continue to modify holdings in order to provide more liquidity and potentially more alternative returns. This is one of the key findings in S&P Fund Service’s sector report covering the alternative strategies – multi-asset peer group.

S&P’s review, covering six managers offering 10 rated capabilities, was conducted in February 2012. 

“This year’s annual review of alternative multi-asset products comes on the heels of difficult 2011 year-end performance,” said S&P fund analyst Jason Patton. 

“With all asset classes still struggling to win investors away from cash, we expect developments in Europe will dictate overall appetite for investment products other than defensive ones in the current environment,” said Mr Patton. 

Against this backdrop, managers are tailoring products to offer efficiency gains and improved protection in negative markets. In other key findings: 

  • Managed futures and other “long volatility” profile strategies are garnering greater allocation within FoHFs.
  • The distinction is increasingly apparent between products with high equity beta characteristics and those showing a more “alternative” return profile with limited equity beta exposure.
  • The ready availability of ETFs and alternative beta products is putting fee pressure on strategies with higher levels of traditional asset class betas, including many classic FoHFs.

5 July 2012

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