Together, these five sub-strategy indices comprise the Wilshire Liquid Alternative Index, which was designed to serve as an industry standard for measuring aggregate performance of the liquid alternative mutual fund universe. The new indices aim to provide relevant and precise performance assessment metrics for the most common liquid alternative investment strategies that are implemented in mutual fund vehicles.
The suite of targeted indices includes the Wilshire Liquid Alternative Equity Hedge Index, Wilshire Liquid Alternative Event Driven Index, Wilshire Liquid Alternative Global Macro Index, Wilshire Liquid Alternative Relative Value Index, and the Wilshire Liquid Alternative Multi-Strategy Index.
The new offering leverages the intellectual capital of two Wilshire business units: Wilshire Funds Management and Wilshire Analytics. Wilshire Funds Management, the investment management arm of the firm that works with financial intermediaries globally, advises on over $150 billion in assets, including traditional and alternative investment strategies. Wilshire Analytics is the technology foundation of Wilshire and creator of the Wilshire 5000 Index.
Wilshire says a key driver for development of the Wilshire Liquid Alternatives Index family is the “wide disparity and lack of a common framework when benchmarking liquid alternative investment strategies.” Upon review of fund prospectuses for the liquid alternative universe, Wilshire’s manager research team concluded that the benchmarks most often used include hedge fund indices, as well as cash and traditional market indices. Each of these approaches falls short of providing a truly relevant and informative performance metric for liquid alternative investment strategies, Wilshire says.
“Having first gone through an in-depth process to build a comprehensive liquid alternative mutual fund space that categorizes funds based on our assessment of the strategy they are running, we are able to create strategy-specific indices that align with what managers are actually doing,” explains Jason Schwarz, president of Wilshire Funds Management. “These five new indices mirror industry-accepted hedge fund categories, but use an apples-to-apples approach given that the underlying index constituents are mutual funds as opposed to hedge funds.”
Wilshire says additional tools are needed to ensure that investment managers and financial advisers are able to bucket, assess and communicate performance of the most common liquid alternative investment strategies.
Those interested in the new liquid alts indices can visit www.wilshire.com for more information.