The number of alternative investment strategies used among four popular types of products more than doubled between 2007 and 2011, according to a new report.
Cerulli Associates of Boston published this finding in its May 2012 issue of "The Cerulli Edge: U.S. Asset Management." The monthly publication analyses topics related to product development and strategy, distribution, pricing, and market segmentation.
The research reveals that the number of open-ended mutual funds (OEMFs), closed-ended funds (CEFs), exchange-traded funds (ETFs) and exchange-traded notes (ETNs) increased to 1,019 products by 2011 from 430 products in 2007.
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The report notes that long-short extension strategies are currently in development or are being considered by 39 percent and 11 percent, respectively, of asset management firms. Also in development or being considered among a significant percentage of these firms are multi-alternative/alternative allocation strategies (28 percent and 11 percent, respectively), currency (28 percent and 11 percent) and absolute return strategies (17 percent and 6 percent).
Among commodity assets, the report says, 58 percent are in ETFs, 39 percent are in OEMFs and the remaining assets are in CEFs and ETNs. Nearly all of the alternative allocation fund assets (97 percent) are in mutual funds; just 2 percent are in ETFS. By contrast, the report notes, most inverse with leverage fund assets (94 percent) are in ETFs.
On average, asset managers report focusing a plurality (42 percent) of their product development efforts on alternative strategy mutual funds or ETFs; only 13 percent focus on developing these strategies in other vehicles.
An additional 35 percent focus on traditional strategy mutual funds and ETFs. And 10 percent of asset manages focus on traditional strategy products in other vehicles, the report says.
While assets in alternative mutual funds and ETFs have increased more than 160 percent since 2008, the report observes that they ended the year at only $379 billion: $214 billion in alternative mutual fund assets; and $165 billion in alternative ETFs assets.
These figures compare with $209 billion and $161 billion, respectively, in 2010; and $134 billion and $126 billion, respectively, in 2009.
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