Alternative Mutual Funds
Alternative mutual funds (“alt funds” or “liquid alts”) are mutual funds marketed as a way to invest in actively-managed hedge fund-like strategies which promise to perform well in various market environments. Alt Funds are marketed as providing stability, diversity and high-yields, all while offering daily liquidity. The popularity of alt funds have increased dramatically in the last few years, with assets totaling more than $300 billion as of November 2014. Despite any benefit they may provide, alternative mutual funds should be viewed critically (specifically when compared to conventional mutual funds). Securities regulators have been concerned that neither customers – nor their stockbrokers – fully understand how alternative funds will react in various market environments and that alt funds may therefore be unsuitable for many investors. Consistent with this concern, FINRA has already found that some firms were negligent (e.g. did too little due diligence on such funds) prior to allowing their brokers to recommend them to customers.
If you have suffered loss in an alternative mutual fund and have been defrauded/misled about its risk, contact The Prosser Law Firm for a free, informative consultation at 901-820-4433.