Simple Alternatives, an alternative mutual fund company focused on providing investors better access to hedge fund managers, has reported an increase in assets under management of 25 per cent in the first half of 2013.
The S1 Fund is a multi-manager, long/short equity mutual fund.
"Institutional and retail investors have come to embrace 'liquid alternatives' recognising the important role in terms of diversification, liquidity, and other desirable characteristics the strategies can serve in a portfolio," says James K Dilworth, Simple Alternatives founder and chief executive. "Growth in liquid alternatives has been driven in a large part by institutional consultants and financial advisors who typically use hedge funds as part of an overall portfolio allocation strategy.
"There is a growing preference for a mutual fund structure, over limited partnerships, as the vehicle for access. These are typically allocators that are already investing in hedge funds, have dedicated allocations to hedge funds, and have a growing preference to use the more liquid structure to allocate to the same exception managers."
Nearly three-quarters of financial advisors currently use alternative strategies, and an equal percentage have increased their usage over the past year, according to a recent study by Financial Advisor. Total assets in US alternative mutual funds are approximately USD550bn.
"With a low historical correlation to US bonds and equities, alternative strategies such as long/short equity are gaining traction with investors that are concerned about current market valuations, and the outlook for key asset classes, in a post-Bernanke investment environment," says Dilworth.
The S1 Fund has a since inception standard deviation of 4.37 per cent and average beta of 0.31 compared to the S&P 500 index, as of 30 June 2013.
Through a disciplined investment process that focuses on strategy allocation, manager selection and risk management, the S1 Fund seeks to grow capital regardless of market direction.