Rekenthaler Report

Why Mutual Funds Can't Be Hedge Funds

John Rekenthaler

Frequent Burials
Once, I was skeptical of "liquid alternatives"--mutual funds (and exchange-traded funds) that emulate hedge funds. Such funds talked big but walked small. I pointed to their lackluster returns and questioned whether their fortunes could change.

No need to question any longer. As Morningstar's Jason Kephart and Kathryn Wing pointed out in yesterday's "Death Is a Way of Life for Liquid Alternatives" (the headline leaves me jealous), liquid alternatives funds are quitting this world. The fund category that is terminating its funds at the highest rate, either through merger or liquidation, is a liquid alternative (managed futures). So is the second-place category, and the third-place category, and the fourth-place category.