An Alternative View—The Trillion Dollar Opportunity
Liquid alternatives are now available in all major markets. Alternative strategies are packaged in multiple products, including mutual funds, UCITs, ETFs, closed-end funds and even in market-linked notes. Options generally abound in terms of product structures and mandates available in each geography. Sales results, however, are, in most cases, mixed.
Liquid alternative funds had been available for many years, but it was not until the financial crisis of 2008 that the category attracted significant attention in the U.S. and, to a lesser extent, in Europe. From relative obscurity, the liquid alternatives category received inflows of tens of billions of dollars as market valuations collapsed and interest rates fell to near zero.
Asset managers were quick to respond to the sudden demand by launching a myriad of new products promising, in the main, non-correlation to equity markets; absolute returns; and protection against ‘black swan’ events. New inflows accelerated; product development was rampant.
In this paper, we explore the liquid alternatives markets of Europe, the United States, Asia, Canada and Australia. We show how investor interest in liquid alternative products has peaked and troughed in each jurisdiction.