In the March 2014 issue of The Cerulli Edge - US Monthly Product Trends, Cerulli examines alternative investments. The March Monthly Spotlight features liquid alternatives in '40-Act funds.
Alternative asset managers that have expertise in high-yield fixed income and distressed assets are investing in the peer-to-peer loan market, such as Colchis Capital and Direct Lending Investments. These firms manage hedge funds that buy peer-to-peer loans from a number of providers and create a diversified pool of loans. Many of these peer-to-peer platforms have received funding from top private investment firms.
Flows into mutual funds were again a large factor for growth (nearly 3% in February) as the vehicle garnered $45.8 billion during the month. Bucking the trend from 2013, taxable bond mutual funds attracted the most flows of any asset class ($11.9 billion) for the month.
ETFs bounced back in February by growing assets more than 5% for the month, supported by net inflows of $23.1 billion. This increase comes after ETF assets fell by -3.3% in January with net redemptions of -$19.0 billion.
In total, asset managers launched 68 alternative mutual funds in 2013, which garnered flows of $3.8 billion. In a recent Cerulli survey on alternatives managers, multi-strategy sleeves in open-end mutual funds earned popularity in product development, with 64% of firms planning to launch one of these funds.