Forbes – Pressures have been mounting on hedge fund managers to hedge their own businesses and diversify away from the hedge fund model itself. Lackluster performance, difficult markets, fees that are perceived as too high, scandals and conflicts of interests are just a few of the factors that are leading managers to set up in a new section of the market: Liquid Alternatives.
“Liquid Alternatives” are investment vehicles that feature an alternative strategy but are packaged in a mutual fund, closed end fund or other exchange-traded product, such as an ETF, instead of the traditional hedge fund. These Liquid Alts all have two features in common however: much more regulation as compared to hedge funds, and a far more complex distribution model. As a result, any hedge fund manager seeking to dive into this area must beef up its infrastructure significantly to accommodate the added complexity.
