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Fund Spy

Look What These Liquid Alts Made Investors Do

Poor timing has investor returns lagging in liquid alternatives.


The past several years have not been great for liquid alternatives, but their Morningstar Investor Returns have been even worse thanks to poor timing decisions.

Investor returns are dollar-weighted returns, as opposed to time-weighted returns, which are the standard way of displaying an investment's total returns. We calculate investor returns for a single fund by adjusting returns to reflect monthly flows and their compounding effect over time. Generally, investor returns fall short of a fund's stated time-weighted returns because, in the aggregate, people tend to buy after a fund has gained value and sell after it has lost value. Thus, they miss out on a key part of the return stream.

Jason Kephart does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.