Not all long/short strategies (or managers) are created equal, something about which Adam Patti doesn’t mince words.
“Every long-only manager is rolling out their long/short strategy,” the chief executive officer of IndexIQ told ThinkAdvisor on Tuesday. “Something like 80% or 85% of long-only managers underperform, but now we’re supposed to believe they’ll somehow outperform with a more complicated long/short strategy? I don’t think so.”
Patti (above) pointed to two areas, in particular, that are a key to success in the space.
“The first in transparency, something liquid alternatives afford,” Patti explained. “It’s the entire reason we launched the firm in 2006 which, I should add, was at a time when no one was talking about alternatives.”
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In a few short years, he added, liquid alternatives have gone from a novelty to playing an important role in a diversified investment portfolio and the firm has seen strong interest in alternative from the institutional and retail advisor channels.
The second, he noted, is track record. The IndexIQ IQ Alpha Hedge Strategy Fund (IQHIX) marked its five-year anniversary on June 30, which the firm claims was the first such fund to market.