The August 2014 Mutual Fund Monitor – Advisor Report examines how our coverage firms address the topic of alternative investing, whether through commentary, strategic insight or product information. Twelve of our 19 coverage firms are considered in our research; seven firms do not focus on alternatives and were discounted. In conducting our research, we primarily sought to establish the major trends and discussions around alternatives offered by firms within our coverage group. Therefore, we assigned no grades to individual firms. Specifically, the report focuses on the following criteria:
- Location & Accessibility
- Definition of “Alternatives”
- Types of Resources Offered
Despite the growing importance of alternatives, only three firms offer a centralized outlet for alternatives-related content. Among these three, however, there are substantial differences in content quality and utility. For example, one firm provides detailed and relatable guidance about alternative investing strategies, while another collects a variety of commentaries that are only tangentially related to the same topic at times. Nine other firms do feature relevant content, but it can only be accessed by using the site’s general search engine.
Amongst the 12 firms that offer alternatives content, one defining theme is that firms are still working through their definitions of what “alternatives” actually are. Some firms make a point to distinguish alternative investing strategies, such as pursuing absolute return or employing a hedge fund from alternative investments, which include assets like gold, MLPs or currency. Both elements deserve their own definitions and attention, but they are not mutually exclusive. Alternative strategies can include alternative or traditional asset classes, and alternative assets benefit greatly from an alternative strategy.
Two firms offer excellent descriptions of specific alternative asset classes that are available to investors, which are helpful when considering how obscure some of those options can be to many investors. In general, however, there is little direct discussion of the actual alternative assets available; most discussions and insights center on the workings of alternative strategies. Two firms serve as typical examples in this case.
Four firms offer excellent resources that outline the growing influence of alternatives in the minds of portfolio decision makers, and project the hypothetical performance of the traditional 60/40 to a new allocation that includes at least some alternative elements. One firm pays particularly close attention to this topic, as its “The New 60/40” strategy occupies the bulk of its product focus.
We discovered the following key findings in our analysis:
- Twenty-five percent of firms feature centralized alternatives content.
- Fifty-eight percent list alternatives as a distinct product category.
- Seventy-five percent address alternatives in commentaries.
- Forty-two percent offer videos explaining alternatives.
- Fifty-eight percent explain how alternative investing affects portfolio construction.