Total assets in registered alternative mutual funds and exchange-traded funds are projected to reach $330 billion by year-end 2012—nearly double the $169 billion of assets in 2007. If the industry can raise advisors’ and clients’ comfort level with liquid alternatives, that figure could virtually double again, to $650 billion in 2017, according to a new study by Financial Research Corporation (FRC).
For such growth to be realized, these funds must clarify the advantages they might be able to provide. “Investors remain extremely risk averse and continue to place a high value on portfolio diversification and volatility management,” Robert Martorana, lead author of the study, said in a statement . “Registered alternative funds have demonstrated a track record of providing effective diversification, but product providers clearly need to commit more time and resources to getting that message across to consumers and their advisors.”
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