Liquid Alts Sizzle in Volatile September

The liquid alternative mutual fund universe significantly outperformed the equity market and hedge funds in September, Wilshire Funds Management reported this week.

The Wilshire Liquid Alternative Index fell by 1.03% in September, compared with a 2.71% loss by the Wilshire 5000 Total Market Index, and a 0.68% gain by Barclays Capital Aggregate Bond Index.

Liquid alternatives also showed up their hedge fund counterparts in September, as the HFRX Global Hedge Fund Index fell by 2.1%.

“All five liquid alternative sub-strategies outperformed their hedge fund counterparts for the month, led by event-driven liquid alternative funds,” Wilshire Funds Management president Jason Schwarz said in a statement.

The Wilshire Liquid Alternative Index family is a joint offering between Wilshire Funds Management and Wilshire Analytics.

Sub-Strategy Performance

The Wilshire Liquid Alternative Event Driven Index, including credit, merger arbitrage and special situations funds, fell by 1.47%, compared with the HFRX Event Driven Index’s loss of 3.24%.

Wilshire said the overweight exposure to merger arbitrage deals that mutual funds tend to have compared with their hedge fund peers paid off in September, as many of the gains during the month came from merger deals, while many of the losses came from distressed and special situations investments.

Equity hedge strategies posted another negative month, with all underlying sectors except utilities and consumer staples reporting losses.