Virtus Investment Partners has launched three multi-manager alternative mutual funds that will employ a range of hedge fund and alternative strategies.
The aim is to provide individual investors the opportunity to more fully diversify their portfolios for improved consistency of returns over market cycles.
The new funds – the Virtus Alternative Total Solution Fund, the Virtus Alternative Inflation Solution Fund and the Virtus Alternative Income Solution Fund – are the first liquid alternative mutual funds sub-advised by Cliffwater Investments, a joint venture between Virtus and Cliffwater LLC, a provider of alternative advisory and asset management services to institutional investors.
Each of the funds is outcome-oriented and uses multiple diversified alternative strategies to address a particular investor need, ranging from core alternatives exposure to inflation protection or income generation.
According to Barry M. Mandinach, executive vice president and head of distribution, the funds use Cliffwater's top-down asset allocation process for portfolio construction, and leverage Cliffwater's proprietary research and open-architecture approach to source a diverse selection of distinctive alternative managers.
"Institutions have a long history of incorporating alternative strategies to manage their risk profile and deliver consistent, lower-correlated returns," Mandinach says. "Now with the Virtus Alternatives mutual funds, individual investors can access the same caliber of strategies that are available to institutions with the additional benefits of daily liquidity, timely tax reporting, transparency, and a low minimum investment."
Mandinach says the inherent unpredictability of financial markets, including the challenges in the current environment, demonstrate the benefits of adding alternatives to a portfolio.
"A portfolio too heavily invested in equities may not have adequate downside protection, and, with interest rates continuing to be near historic lows, a portfolio too heavily allocated to traditional fixed income may be overly exposed to the possibility of rising rates negatively affecting the value of their bonds and not offer the return potential many investors need to meet their financial goals. So the traditional approach to building a personal portfolio with a balance of equity and fixed income allocations may no longer be sufficient to deliver, on an aggregate basis, inflation-beating returns over time."
"Financial advisors recognise that a meaningful allocation to alternatives may be necessary to serve as a diversifier to help buffer volatility and contribute to the growth that clients so desperately need going forward," says Mandinach. "Incorporating alternative investments has been a time-tested approach to reduce portfolio volatility and generate more consistent results through market cycles."
