Cerulli: Investors Flocking to Alternative Funds

By Warren S. Hersch

August 10, 2011 at 08:00 PM

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Mutual funds that invest in alternative asset classes increased assets under management 60% in 2010, to $201 billion.

Analysts at Cerulli Associates Inc., Boston, have published those figures in a report on the market for retail alternative products and strategies. The analysts looked at investment vehicles such as hedge funds, private equity funds and commodities as well mutual funds and exchanged-traded funds.

Alternative-asset funds hold just 2.6% of total long-term mutual funds assets, but that share is up from 1.9% in 2009.

The 60% asset growth rate compares with a 2010 growth rate of 16% for other types of funds.

The flow of cash into alternative funds increased to $52 billion 2010, up from $31 billion in 2009 and up from $15 billion in 2008.

When Cerulli polled asset managers, it found that 76% said the recent financial crisis has increased their interest in investment alternatives. Fund companies have responded to that increase in interest by developing new funds. The number of new alternative asset funds introduced increased to 65 in 2010. In previous years, the new of alternative asset funds was always under 50.