What’s ahead? Liquid alts!

Among industry trends highlighted in a recent NICSA webinar featuring Lee Kowarski, partner at kasina, and Avi Nachmany, director of research at Strategic Insight, is a persistent trend toward product innovation in liquid alternatives. Webinar participants identified these new products as among the most likely to affect asset management operations in 2014.

Asset allocation drives innovation

Innovation in investment product development is driven by asset allocation. Allocation methodologies generally recommend that, at any point of the cycle, a low volatility anchor comprises about 40%-60% of the portfolio mix. In the past, that’s driven bond sales. Today, it’s driving investors towards liquid alternatives.

Greater complexity

Products that are not directionally correlated with the stock market – such as unconstrained bond funds and long-short strategies– are increasingly of interest. Yet, these products are typically more complicated than the average stock and bond fund. This is due to the incorporation of flexible techniques adopted from hedge funds and other unconstrained products.

New requirements

Greater complexity of liquid alternative investments has implications across all aspects of asset manager operations:

  • Marketing & sales: How to tell the story, educate advisors and investors, organize wholesalers in new ways, and remain compliant.
  • Operations: Challenges to old ways of pricing, trading and customer support.
  • Technology: Crucial for supporting and distributing liquid alts.

Join us!

Are you struggling with some of the challenges arising from the advent of liquid alternatives? The NICSA Liquid Alternatives Workshop: A Back Office Perspective will teach you everything you need to know. Join us on April 22 in Jersey City. Click here to learn more and to register.

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