Cliffwater: Liquid hedge fund strategies have 1-point performance drag

Pensions & Investments – Returns of liquid versions of hedge fund strategies in aggregate lagged those of private partnership versions of the same approach by an average of one percentage point annualized over the 10-year period ended March 31, according to a new report by alternative investment consultant Cliffwater.

With the proliferation of liquid alternative vehicles — mutual funds, UCITS funds, separately managed accounts, managed account platforms and securities of listed hedge funds — Cliffwater decided to examine “whether or to what extent investors in liquid vehicles forego return in exchange for better liquidity, compared to equivalent investment in institutional private partnership vehicles,” according to the report, “Performance of Private Versus Liquid Alternatives: How Big a Difference?”

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