Carlyle Group joins hedgies' rush into liquid alt mutual funds

Will launch two '40 Act funds to lure financial adviser business
FEB 11, 2014
Financial advisers' infatuation with liquid alternatives continues to draw bigger and bigger hedge fund managers to the space. The latest is The Carlyle Group, which manages $185 billion across 122 hedge funds and 81 hedge funds of funds. The Carlyle Group plans to launch its first two '40 Act liquid alternatives mutual funds, one a long/short commodities fund and the other a balanced risk global allocation fund similar to risk parity, according to a filing with the Securities and Exchange Commission. The long/short commodities fund will be subadvised by hedge fund manager Vermillion Asset Management, while the balanced risk global allocation fund will be managed by Carlyle GMS Investment Management L.L.C. The filing did not include expense ratios. Carlyle Group spokeswoman Liz Gil did not return calls for comment. Carlyle is just the latest hedge fund manager to move into the liquid alternatives space. Fellow hedge fund managers Blackstone Group Inc., KKR & Co. and BlackRock Inc. have all made a significant push for financial adviser business recently. It's not hard to see why. Liquid alternative mutual funds had more than $88 billion of net inflows through the first 11 months of 2013, up from $19 billion in all of 2012, according to Morningstar Inc. Demand for liquid alternatives mutual funds, which offer daily liquidity and lower fees and investment minimums than hedge funds, is expected to increase as bonds continue to struggle with rising interest rates and the smooth upward ride for stocks gives way to more normal volatility.

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