Invesco makes a big push into alternatives

Six new liquid alternatives funds are part of firm's effort to help advisers handle risk

Jan 7, 2014 @ 12:01 am

By Jason Kephart

Invesco has launched six new liquid alternatives mutual funds in the past month, more than doubling its total number of such funds as it makes a big push into the fast growing space.

“A large part of our conversations with advisers is around risk mitigation, risk management and finding uncorrelated assets,” said Andrew Schlossberg, head of U.S. retail distribution and global ETFs. “It's a big topic. We see it as a long-term topic of discussion with advisers.”

Since last month, Invesco has launched an all-cap market-neutral fund, a global-market-neutral fund, a U.S. long/short equity fund, a global-macro long/short equity fund, an international-macro long/short equity fund, and a global macro fund.

Each of the funds will be run by portfolio managers who already run similar strategies in separately managed accounts for institutional clients.

Invesco also is working on expanding its suite of fixed-income alternatives, but Gary Wendler, head of product development and investment measurement/risk, declined to discuss specifics since nothing has been filed with the Securities and Exchange Commission.

“Alternatives are going to be a lot bigger part of portfolios going forward because of the diversification benefits,” he said.

Invesco isn't the only asset manager betting that alternatives will continue to get more popular.

Well known hedge funders like The Carlyle Group, Blackstone Group Inc., and KKR & Co have also been increasing their push into the area.

Follow the money, and you'll see why. Liquid alternative mutual funds had a record $88 billion of net inflows through the first 11 months of 2013, up from $19 billion in 2012.

The majority of the new money flowing into the liquid alternatives space went into nontraditional bond funds, but long/short equity funds, such as the ones Invesco launched, attracted $18 billion through November, up from $6.1 billion, thanks to an increased acceptance among institutional investors.

More than 45% of institutions said that they use long/short mutual funds, for example, up from 38% in 2010, according to the Morningstar and Barron's 2012 Alternative Investment Survey of U.S. Institutions and Financial Advisers.

The percent of institutions using long/short equity hedge funds fell to 26%, from 61% in 2010, according to the study.


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