Wilshire Associates has rolled out five new liquid alternative indices that will track the performance of specific classes of liquid alternative mutual funds, the Santa Monica-based company said Wednesday.
In August, Wilshire introduced the Wilshire Liquid Alternative Index, which values alternative mutual funds based on their track record, their correlation to stocks and fixed-income performance, and the funds' overall assets under management.
The five new indices, which will together make up the Wilshire Liquid Alternatives Index, are: equity hedge index; event driven index; global macro index; relative value index; and the multi-strategy index.
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Plan sponsors have shown greater willingness to deploy more complex strategies in investment menus.
Liquid alternative mutual funds were largely an unknown entity to sponsors only a few years ago. At the end of 2008, only 75 options existed. Today there are about 450, according to Wilshire.
But the struggle to value the complicated funds on a daily basis has, in part, prevented their universal adoption in the 401(k) world.
Prior to Wilshire's new index, liquid alternative funds were benchmarked against other hedge fund indices and traditional market indices. In a statement, the company said those methods fall short of providing a "relevant performance metric."
"The five new indices mirror industry-accepted hedge fund categories, but use an apples-to-apples approach given that the underlying index constituents are mutual funds as opposed to hedge funds," said Jason Schwarz, president of Wilshire Funds Management.
So far, the Liquid Alternative Index is showing stable prices in the fund category. Wilshire's index calculator prices the entire index at $159.79 a share, up $1.03 year-to-date.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
