New York (HedgeCo.net) – Liquid alternative mutual funds experienced tremendous growth from the end of the financial crisis in 2008 through 2014 and the growth came in two phases: the number of funds being offered and the assets under management. The growth made this segment of the alternative investment industry one of the hottest areas with hedge fund managers and mutual fund managers alike rushing to gain exposure to the space.

Traditional asset management firms such as J.P. Morgan and Guggenheim partners launched new liquid alt funds as did traditional alternative managers like Blackstone and the Carlyle Group, and who can blame them as assets in the industry ballooned from approximately $125 billion at the end of 2010 to approximately $310 billion at the end of 2014.

Now that the stock market has seen a period of heightened volatility, a number of these liquid alternative funds have closed up shop in 2015. A recent report from the Wall Street Journal stated that 31 liquid alts have closed this year and that is up from 22 in 2014. While the headline is a bit sensationalistic in that it says that a “record number of funds” have closed this year, it is also a little expected as the number of funds offered is also at a record high. When the number of funds offered is so high, the probability of having a greater number of closings is also high.

Rick Pendergraft
Research Analyst
HedgeCoVest