Liquid Alternatives Gain $17.6B in AUM As Fund Numbers Contract

Apr 18 2017 | 12:13am ET

Investors continued to allocate capital to liquid alternative strategies during the first quarter, according to Q1 2017 edition of the Wilshire Liquid Alternatives Industry Monitor, although the net number of funds fell.

Wilshire, a major player in the liquid alts space and home to the Wilshire Liquid Alternative Index and its related subindexes, publishes the report quarterly to provide information on index returns, fund launches and closures, asset changes, and capital flows in the liquid alternatives industry.

AUM in the liquid alternatives universe as tracked by Wilshire increased by $17.6 billion during Q1 2017. Assets increased during the period through a combination of organic growth, capital flows, and new entrants (new entrants are comprised of new fund launches, and also pre-existing funds/strategies that were reclassified as liquid alternatives during the quarter.

Other highlights of the Q1 report: 

  • Seven new liquid alternative funds were launched in Q1 2017, including 3 Equity Hedge funds, 2 Relative Value funds, 1 Global Macro fund and 1 Multi-Strategy fund.
  • There were 18 fund liquidations during the period, including 7 Equity Hedge, 4 Global Macro, 4 Multi-Strategy, and 3 Event Driven.
  • Net capital inflows into the sector totaled approximately $3.6 billion during the quarter.
  • Capital continued to leave the Global Macro space for a second consecutive quarter, experiencing $400 million in net outflows.
  • New inflows  into Equity Hedge products totaled $300 million.
  • Investors pulled net $300 million from multi-strategy funds.
  • Notable fund additions to the universe were two large Relative Value strategies: John Hancock Strategic Income Fund and Metropolitan West Unconstrained Bond Fund. Newly classified as liquid alternatives, these two entrants increased universe AUM by nearly $10 billion.

Exiting the second quarter, market share by strategy in the liquid alternatives universe was as follows: 39% relative value, 24% equity hedge, 16% global macro, 15% multi-strategy, and 6% event-driven. In total, Wilshire counts some 521 funds managing $306 billion within the liquid alternative universe, which numbered less than 100 funds in June 2009.

Founded in 1972, Wilshire Associates is an independent investment consulting and services firm that provides plan sponsors, investment managers and financial intermediaries with a wide range of services. Its business units include Wilshire Analytics, Wilshire Consulting, Wilshire Funds Management and Wilshire Private Markets, and it is home to the Wilshire 5000 Total Market Index. Based in Santa Monica, California, the firm provides services to clients in more than 20 countries representing more than 500 organizations with assets totaling more than $7 trillion.

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