Investors pull $6b from hedge funds. So what’s the alternative “alternative”?
Jun 11th, 2008 | Filed under: Hedge Fund Industry TrendsThere are reports this week that US investors yanked nearly $6 billion out of hedge funds in April. Is this the beginning of a trend? Who knows? But there seems to be at least one corner of the alternative investment industry that is poised for growth in the coming years - so called “alternative alternatives”.
If you are a member of the Chartered Alternative Investment Analyst (CAIA) Association, you are probably familiar with the on-going polling conducted by the association each month. Survey topics are primarily focused on those areas for which market knowledge is currently fragmented or quickly evolving.
In May, the CAIA curriculum survey focused on the growing area of alternative alternative or alt-alt investments. While there is no settled consensus on the boundaries of the alt-alt universe, the alt-alt universe is usually taken to include investments outside of traditional securities markets. Examples of alt-alts include weather derivatives, carbon credits, niche assets such as wine and art, litigation claims, insurance claims, and intellectual property rights such as patents.
Recent announcements by large institutional investors, such as ABP, have suggested a growing interest in this space. Products in this area have been structured using hedge fund models, private equity models, and hybrids of the two. Over four hundred CAIA members responded to the alt-alt survey over the course of four days, representing a total response rate of more than 20% of the approximately 2000 members.
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