How Disruptive Are Liquid Alts? Think Uber
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Thursday, May 05, 2016

How Disruptive Are Liquid Alts? Think Uber

Hedge-fund-like strategies may could be as disruptive in the investing world as a certain famous ridesharing company has been to taxis.

Mark Okada
Highland Capital Management, L.P.
Chief Investment Officer
Mark Okada, co-founder and chief investment officer of Highland Capital Management [profile], says that liquid alternatives could be as disruptive as Uber. Okada spoke this afternoon at Highland's mid-year investment outlook press luncheon at a school club in New York City.

Okada and Michael Gregory (head of healthcare and "equity guy" for HCM and CIO for Highland Alternative Investors) tell reporters that the hedge fund industry will continue to see "a steady truncation of fees". They warned that liquid alts shops "need to deliver institutional quality" with their alternative mutual funds. And they see more and more pension funds and other institutional or high net worth investors shifting away from traditional hedge funds and to cheaper, more transparent, more regulated, liquid alts for strategies that fit into such a structure.

Okada and Gregory were joined by Trey Parker (partner and head of credit at HCM) and Jason Trennert (co-founder and chief investment strategist at Strategas Research Partners) for the luncheon's featured panel discussion and subsequent Q&A. Central bank policy, currencies, the energy sector's woes, and other familiar investing topics all came up.

And naturally, the presidential election was top of mind, too. Gregory told reporters that for too long investors have been heavily underestimating Donald Trump's primary and general election chances.

"We are now in a Trump-Clinton dynamic," Gregory says, noting that investor polls now see only a 22-percent chance of Trump winning. "We think that Trump is mis-priced."

"On an unprecedented scale, both candidates are widely disliked," Gregory adds. "It will be a messy, bombastic and spicy campaign. That may favor Donald Trump's form of communication."

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