Traditionally, hedge funds had been illiquid investments tailored to high-net-worth players in the alternative investments space.
That tradition is changing, said Kevin Mirabile, a clinical assistant professor of finance at the Gabelli School of Business, and the new areas of alternative investment are growing at an impressive rate.
“Liquid alternative investments,” hedge fund products in mutual-fund wrappers, are now “the highest growth area in the hedge fund world,” Mirabile said in an interview with Charlie Wright on Strategic Investors Radio, a web-based broadcast.
“The assets under management are now approximately 15 to 20 percent of all the assets under management in the hedge fund space,” Mirabile said.
This is part of a migration in the hedge fund industry, the professor said.
“For the majority of the first 30 years of the hedge fund industry, an investor had to be accredited, an investor had to be high net worth, in order to invest in a hedge fund in the first place,” Mirabile said. “And when he did, he might not be able to get his money back on a daily basis. He could only get it back on a quarterly [or] semi-annual [basis]. But what’s happened over time is the hedge fund industry has migrated, and now today, many hedge fund strategies are being offered as mutual funds.”
Mirabile was on the show to talk about investment trends and the second edition of his book, Hedge Fund Investing: A Practical Approach to Understanding Investor Motivation, Manager Profits, and Fund Performance.
The liquid alternative investments are being offered by some of the leading brand names in the hedge fund space, Mirabile said.
“It’s no longer a private fund structure and illiquid market,” Mirabile said. “There are plenty of opportunities for retail investors to participate in this space.”
Here is audio of the full interview: