February 2016, Boston. The February 2016 issue of The Cerulli Edge – U.S. Monthly Product Trends Edition examines the recent performance of liquid alternatives and how education is needed for wider adoption of these products. The Monthly Spotlight explores exchange-traded fund (ETF) issuers’ belief that the current offering of alternative ETF products is insufficient to meet investor demand.
Highlights from this research:
- Mutual fund assets sank for the third straight month, slipping 4.7% to $11.3 trillion in January. Flows were net negative ($12 billion) for the month. While ETFs bled $1.8 billion in January flows, combined with poor market returns, led to a 4.7% drop in assets, the vehicle still maintained more than $2 trillion in total assets.
- Institutional investors have seen value in liquid alternative products given their favorable fee structures, increased transparency, and greater liquidity. Many of these benefits are not available in traditional private placement or LLC structures.
- Alternatives are still underutilized across client types. Cerulli data from 2015 illustrates that allocations range from 5% for conservative investors to about 7% for aggressive investors. This under-allocation provides an opportunity for asset managers, but they must address advisors wariness to adopt the asset class. This process must start internally, especially because 65% of asset managers cite a lack of knowledge among salesforce/employees as at least a moderate challenge to the distribution of liquid alternatives.
NOTES TO EDITORS:
These findings and more are from: The Cerulli Edge – U.S. Monthly Product Trends Edition, February 2016 Issue.
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