Liquid alternatives provide exposure to non-traditional asset classes and private markets through publicly available fund vehicles, such as mutual funds, UCITS, and exchange-traded funds (ETFs), familiar to retail investment segments. While they have existed for over two decades, they represent an area of increasing interest for investors looking to access alternative assets that are offering the potential for attractive, differentiated returns through a generally more liquid and transparent format than investing in a private fund.
Liquid alternatives can help bridge the gap between traditional and alternative assets for investors that do not have the mandate or the resources to invest in hedge funds, and offer several ways to add value to their portfolio. As investors continue to look for ways to increase the risk-adjusted performance of their portfolios, while balancing their liquidity needs, liquid alternatives can offer a suitable vehicle to achieve such objectives in a robust regulatory environment designed to enhance investor protection. Liquid alternatives offer investors and managers the opportunity to further align their interests and participate in a fast-growing area of the alternative investment universe.
This paper offers an insight into the growth of the liquid alternatives market and details the key areas for investors to consider when exploring ways to diversify their portfolio with liquid alternatives.
Topics covered include the growth of the liquid alternatives market, the characteristics of a liquid alternatives product, the costs of investing in liquid alternatives, the performance of liquid alternatives, and how investors can deploy liquid alternatives, including guidance as to the type of due diligence required when investing. Also included in this primer is a high-level overview of the various regulatory frameworks governing liquid alternatives.
We do hope that you find this paper useful.
Managing Director, Global Head of Research and Communications, AIMA
Managing Director, Head of Unifi, CAIA Association
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A quiet revolution is underway which is set to transform public and private market investing.
Liquid alternatives can help bridge the gap between traditional and alternative assets for investors that do not have the mandate or the resources to invest in hedge funds and offer several ways to add value to your portfolio.
In this episode, marking the launch of AIMA’s Bridging a Gap: Mapping the liquid alternatives universe paper, The Long-Short speaks to Francesco Paganelli, Senior Analyst at Morningstar, to discuss all things liquid alternatives.
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