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More About This Title Alts Democratized + Website: A Practical Guide toAlternative Mutual Funds and ETFs for Financial Advisors
English
A Comprehensive Review of the Liquid Alts Market and How ‘40 Act Products Can Enhance Client Portfolios
Liquid alternatives give investors access to hedge fund strategies with the benefits of ’40 Act products: lower fees, higher liquidity, greater transparency, and improved tax efficiency.
Alts Democratized is a hands-on guide that offers financial advisors and individual investors the tools and analysis to enhance client portfolios using alternative mutual funds and ETFs. Well-grounded in research and replete with more than 100 exhibits of Lipper data, Alts Democratized profiles the top ten funds in each of the eleven Lipper liquid alt classifications. This includes total net assets, fund flows, risk and return metrics, and the factor exposures that drive performance and help explain correlations to various forms of beta. Jessica Lynn Rabe and Robert J. Martorana, CFA, combine this research with a comprehensive framework for fund selection and portfolio construction to enhance the asset allocation process, facilitate portfolio customization, and manage client expectations.
In addition, the book includes functional perspectives on issues pertinent to financial advisors such as fees, client suitability, and volatility management. This helps advisors apply the concepts to portfolios and offer actionable investment advice. The authors also interviewed executives at leading wealth management firms to provide color on industry trends and best practices.
The companion website provides ancillary materials that reinforce and supplement the book, including:
- The authors’ top ten takeaways
- Classification cheat sheet
- Portfolio construction guide (full color)
- Talking points for clients
- Q&A on liquid alts
- Presentation with all 118 exhibits from the book (full color)
Alts Democratized comprises a complete resource for the advisor seeking new sources of alpha, diversification, and hedging of tail risks.
English
JESSICA LYNN RABE is a Research Associate at ConvergEx Group, a global brokerage company based in New York. Rabe assists the firm's Chief Market Strategist in publishing the ConvergEx MorningBriefing, a daily commentary on financial markets. Rabe has also published articles and contract research on the liquid alts industry.
ROBERT J. MARTORANA, CFA, owns Right Blend Investing, LLC, a Registered Investment Advisory firm based in New Jersey. Martorana manages client portfolios, analyzes alternative products, and is a consultant to the mutual fund industry.
English
Foreword xiii
Robert Jenkins, Global Head of Research at Thomson Reuters Lipper
Acknowledgments xvii
Introduction xix
CHAPTER 1 Definitions and Methodology 1
Definitions 1
Lipper Classifications 2
The Future 2
Methodology 3
Guide to Chapters 3 through 13 5
Summary 8
CHAPTER 2 Road Map for the Liquid Alts Space 9
Liquid Alts in Context 9
Assets and Net Flows 13
IPOs and Liquidations 13
Risk and Return 18
Summary 20
Questions 20
CHAPTER 3 Absolute Return Funds 21
Definition 21
Total Net Assets and Net Flows 22
Risk and Return 23
Factor Exposures 24
Asset Allocation and Fund Selection 25
Top Ten Funds 26
Blockbuster and Spotlight 29
Summary 33
Problems 33
References 34
CHAPTER 4 Alternative Active Extension Funds 35
Definition 35
Total Net Assets and Net Flows 36
Risk and Return 37
Factor Exposures 38
Asset Allocation and Fund Selection 40
Top Ten Funds 41
Blockbuster and Spotlight 44
Summary 47
Problems 47
CHAPTER 5 Alternative Credit Focus Funds 49
Definition 49
Total Net Assets and Net Flows 50
Risk and Return 51
Factor Exposures 52
Asset Allocation and Fund Selection 54
Top Ten Funds 55
Blockbuster and Spotlight 60
Summary 63
Problems 63
References 63
CHAPTER 6 Alternative Currency Strategies Funds 65
Definition 65
Total Net Assets and Net Flows 66
Risk and Return 67
Factor Exposures 68
Asset Allocation and Fund Selection 69
Top Ten Funds 70
Blockbuster and Spotlight 76
Summary 77
Problems 77
Reference 77
CHAPTER 7 Alternative Equity Market Neutral Funds 79
Definition 79
Total Net Assets and Net Flows 80
Risk and Return 80
Factor Exposures 82
Asset Allocation and Fund Selection 84
Top Ten Funds 84
Blockbuster and Spotlight 88
Summary 91
Problems 92
CHAPTER 8 Alternative Event-Driven Funds 93
Definition 93
Total Net Assets and Net Flows 94
Risk and Return 95
Factor Exposures 96
Asset Allocation and Fund Selection 98
Top Ten Funds 99
Blockbuster and Spotlight 104
Summary 106
Problems 106
CHAPTER 9 Alternative Global Macro Funds 107
Definition 107
Total Net Assets and Net Flows 108
Risk and Return 110
Factor Exposures 111
Asset Allocation and Fund Selection 112
Top Ten Funds 113
Blockbuster and Spotlight 115
Summary 119
Problems 120
CHAPTER 10 Alternative Long/Short Equity Funds 121
Definition 121
Total Net Assets and Net Flows 122
Risk and Return 123
Factor Exposures 124
Asset Allocation and Fund Selection 126
Top Ten Funds 127
Blockbuster and Spotlight 131
Summary 134
Problems 135
CHAPTER 11 Alternative Managed Futures Funds 137
Definition 137
Total Net Assets and Net Flows 138
Risk and Return 139
Factor Exposures 140
Asset Allocation and Fund Selection 141
Top Ten Funds 141
Blockbuster and Spotlight 143
Summary 148
Problems 148
CHAPTER 12 Alternative Multi-Strategy Funds 149
Definition 149
Total Net Assets and Net Flows 150
Risk and Return 150
Factor Exposures 152
Asset Allocation and Fund Selection 152
Top Ten Funds 153
Blockbuster and Spotlight 156
Summary 160
Problems 160
CHAPTER 13 Dedicated Short Bias Funds 161
Definition 161
Total Net Assets and Net Flows 162
Risk and Return 163
Factor Exposures 164
Asset Allocation and Fund Selection 164
Top Ten Funds 165
Blockbuster and Spotlight 170
Summary 172
Problems 172
CHAPTER 14 Lipper Alternative Classifications Summary 173
Lipper Alternative Classification Roles 173
Absolute Return Funds 174
Alternative Active Extension Funds 175
Alternative Credit Focus Funds 175
Alternative Currency Strategies Funds 176
Alternative Equity Market Neutral Funds 177
Alternative Event Driven Funds 177
Alternative Global Macro Funds 178
Alternative Long/Short Equity Funds 178
Alternative Managed Futures Funds 178
Alternative Multi-Strategy Funds 179
Dedicated Short Bias Funds 179
CHAPTER 15 Portfolio Construction 181
Holistic and Goals-Based 181
Macro Environment 182
Correlations Converge 183
Evolution of Investment Management after the Crash 183
Core/Satellite Investing 187
Micro-Endowment Model 188
Summary 190
Questions 191
CHAPTER 16 Volatility Management 193
How Volatility Drag Reduces Compound Returns 194
Talking Points for Clients 199
Behavioral Discipline 199
Summary 200
CHAPTER 17 Suitability and Fees 201
Suitability and Results 201
Interviews 202
Fees 206
Summary 207
Questions 207
CHAPTER 18 Fund Selection 209
Five Key Roles 210
General Tips about Fund Selection 216
Summary 217
CHAPTER 19 Interviews 219
Stephen Horan 219
Roger Paradiso 224
Daryl Dewbrey 228
Daniel Egan 233
Conclusion 237
About the Companion Website 239
About the Authors 241
Index 243
