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Mainstream Alternatives

by Lee

Just in the past few months:

• State Street Global Advisors announced that they will will launch a small-cap long/short strategy, probably a 120/20 fund
• New York Life Investment Management's Equity Investors Group announced a 130/30 strategy
• DWS Scudder began wholesaling two new structured notes, one of which was capital protected
• A survey by Rydex AdvisorBenchmarking found that about half of RIAs believe that alternative investments will soon be as important in their portfolios as traditional investments

The list could go on for pages. Alternatives are going mainstream in the asset management industry.

As of the end of 2006, there was a total of ~$6.3 billion in net assets in long/short mutual funds (double the level at the end of 2005). With the restictions on mutual funds taking short positions lifted in the late 90's, we are beginning to see firms explore numerous opportunities, and advisors and investors are taking notice.

For those firms that still consider ETFs to be "alternative products," I encourage you to at least begin to explore the various options that are out there so that you don't get left behind.