Alternative strategies focus on liquidity
As retail investors continue to cling to cash, fund-of-hedge-fund strategies have moved to modify holdings to provide more liquidity, according to a new report released by Standard & Poor's Fund Services (S&P).
"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 S&P fund analyst Jason Patton.
Against this backdrop, managers are tailoring products to offer efficiency gains and improved protection in negative markets, he added.
As a result, the ready availability of exchange-traded funds is putting fee pressure on strategies with higher levels of traditional asset class bias, including many classic fund-of-hedge-funds.
The report, which covered six managers offering 10 rated capabilities in the multi-asset alternative strategies, comes on the heels of a difficult 2011 year-end performance, Patton said.
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