Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Morningstar Wrangles with an Alternatives Stampede Not Rated 3.0 Email Routing List Email & Route  Print Print
Wednesday, April 02, 2014

Morningstar Wrangles with an Alternatives Stampede

Reported by Anastasia Donde

Chicago-based research firm Morningstar which is, arguably, the bible on mutual fund information, may have to retool the way it covers alternative mutual funds, as it's getting flooded by new launches in the space. There were about 64 new fund entrants last year and 52 the year prior, bringing the total listed alternative mutual funds in the database to over 400.

All mutual funds are eligible for being included in the database, though only three-year old ones can get quantitative star ratings. Morningstar already issues qualitative reports on younger funds, but the firm may have to get selective about which ones it will cover. Josh Charlson, Morningstar's new head of alternative funds research, said that given the sheer number of new alternative funds, Morningstar may have to develop a strategy for which ones it will cover comprehensively.

"Some of these funds have grown so large so fast that we may have to change the way we go about this," he said, explaining that Mornignstar may have to limit its analyst coverage to the bigger, more well-known firms.

He declined to elaborate on how the firm might alter its approach, but people familiar with Morningstar say it could set an asset-size minimum for some of the strategies.

Morningstar's Charlson took over the alternative research role last month, replacing Nadia Papagiannis, who joined Goldman Sachs Asset Management as director of alternative strategy in the firm's global third party distribution business in January. Charlson was previously a strategist on Morningstar's fund-of-funds research team.

Some of the new alternative funds just launched in the past year or two came straight out of the gate with large chunks of money. The Blackstone Alternative Multi Manager I fund, which was launched in August, is now managing $1.2 billion, the Arden Alternative Strategies I fund, which came out in Nov., 2012, is overseeing $1.1 billion and the Neuberger Berman Absolute Return Manager A fund, which was launched in May, 2012, is handling $1.2 billion, to name a few.

Research professionals at wealth management firms are weighing the same question and say they approach these funds on a case by case basis. Beverley Sharp, the global head of retail research at Mercer Wealth Management in London, said Mercer will normally take into account the managers' past experience in overseeing similar funds. "We have never required managers to have a three-year track record, we have always taken past track records into account," she said.

Mercer, which does asset and wealth management and consulting for a range of institutional and retail clients, approaches all research this way. "It's nothing special in liquid alts space," said Simon Fox, Mercer's head of alternative research.

"We're trying to work out whether the manager will be able to add value on a very qualitative, forward-looking basis, where we'll look at the managers' experience in prior firms or related products," he added.

Ray Joseph, head of investment management research at UBS Wealth Management, said the firm rolled out a liquid alternatives model as part of an asset allocation plan for financial advisors at the end of 2012. And as a part of that model, UBS does usually suggest a longer track record for alternative mutual funds, but will still look at ones that came from a similar strategy with a longer life span.

Though he noted that UBS generally believes asset allocation modeling, not manager selection, will drive returns.

"Our biggest concern is helping advisors use [alternative mutual funds] properly. Cherry picking individual strategies or individual funds is not helping," he said. "We think it's about a model approach targeted towards a specific need for the client." 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

3.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2021: Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly


  1. ETF.com Awards 2020, April 20
  2. The 31st Sub-Advised Funds Forum, Apr 20-21
  3. IDC Virtual Roundtable: Florida - April 2021, April 20
  4. IMEA Marketing Council Roundtable | Engaging Advisors In a Virtual World, April 21
  5. MMI Summit 2021, Apr 21-22
  6. MFDF Director Discussion Series - Open Forum via Zoom (Northeast), April 21
  7. FIASI virtual event - ESG in Fixed Income: Shining a Light on Transparency, Apr 22-23
  8. IDC Virtual Roundtable: Alabama, Georgia, North Carolina, and South Carolina - April 2021, April 22
  9. Nicsa webinar - Diversity Data: What is at stake? Business, Reputation and Talent, April 22
  10. IDC Webinar: The Future of the Workplace - April 2021, April 23
  11. IDC Virtual Roundtable: Arkansas, Louisiana, Mississippi, Oklahoma, Tennessee, and Texas - April 2021, April 27
  12. IMEA In Session - Post-Covid Sales Coverage, April 27
  13. MFDF Case Studies in Fund Oversight — A Virtual Roundtable for Directors, Apr 28-29
  14. IDC Virtual Roundtable: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota - April 2021, April 29
  15. 44th Annual AIMSE Marketing & Sales Conference, May 2-4
  16. MFDF Director Discussion Series - Open Forum via Zoom (Southeast), May 5
  17. ICI 2021 General Membership Meeting - Day 1, May 6
  18. Emerging Manager Forum USA, May 12-14
  19. ICI 2021 General Membership Meeting - Day 2, May 13
  20. 2021 FINRA Annual Conference, May 18-20
  21. IDC Speaker Series - Abby Joseph Cohen: A Conversation About the State of the Global Markets, May 19
  22. 2nd annual ETFGI Global ETFs Insights Summit - USA, May 19-20
  23. MFDF Director Discussion Series - Open Forum via Zoom, May 19
  24. Irish Funds Online Annual Global Funds Conference 2021, May 19-20
  25. MFDF webinar - Fund Director Compensation: MPI Annual Survey (2021), May 20
  26. ICI 2021 Operations and Technology Conference, May 20




©All rights reserved to InvestmentWires, Inc. 1997-2021
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use