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Tuesday, April 08, 2014

Virtus Selects Sub-Advisors For Alts Trust

by: Anastasia Donde

Ten alts managers have won spots with Virtus Investment Partners. George Aylward's team at the Hartford, Connecticut-based fund family have leaned on Daniel Stern's consultants at New York City-based Cliffwater to build out an alternative series trust since last year.

Virtus executives revealed the ten new subadvisor selections in SEC filings. Virtus spokesperson Joe Fazzino declined to comment further on the funds as they're in the process of being registered with the SEC.

The newly-awarded mandates are spread across three mutual funds: Virtus Alternative Total Solutions Fund, Virtus Alternative Income Solutions Fund and Virtus Alternative Inflation Solutions Fund.

That first fund taps Lazard Asset Management to handle convertible arbitrage and infrastructure strategies, Graham Capital Management for global macro, Ascend Capital and Owl Creek Asset Management for long/short equity, Armored Wolf, Brigade Capital Management, ICE Canyon and MAST Capital Management for long/short credit, Harvest Fund Advisors for a Master Limited Partnership strategy and LaSalle Investment Management Securities for real estate.

The fund portfolio will invest in income, real asset, long/short equity and credit, among other alternative strategies with the goal of providing a positive total return over several market cycles. A second objective for the fund PMs is to maintain low correlation to traditional stocks and bonds, according to fund documents.

The Virtus Alternative Income Solutions Fund will be focused on delivering yield from a diversified set of income generating securities. It will use the same managers for long/short credit, MLP and real estate sleeves, with the addition of Lazard handling a global income strategy, according to N-1A forms filed on March 28.

The third fund will be the Virtus Alternative Inflation Solutions Fund, which will aim to help investors fight inflation with strategies that deliver a total return that exceeds the rate of inflation over the course of a market cycle. The fund will use Lazard for infrastructure, Harvest for MLP, LaSalle for real estate and Armored Wold and Brigade for long/short credit, with the addition of Credit Suisse Asset Management running a commodity strategy.

Cliffwater, which advises institutions on hedge fund and other alternative investing, helped pick the managers for the fund and Stern, the firm's head of hedge fund research is listed as a manager of the fund.

Cliffwater has also formed a partnership with Principal Funds in the fall of 2011 to launch the Principal GlobalMulti-Strategy A fund (PMSAX), being one of the early entrants into the liquid alternatives space.

That fund now has $1.4 billion under management and returned 4.14 percent for the one year ending April 3. It uses Loomis Sayles & Co., Graham, PIMCO, AQR and York Capital Management as some of the sub-advisors.

Many fund-of-hedge-fund firms, including Blackstone, Arden, K2 and Permal, have been launching alternative multi-manager mutual fund strategies, but Cliffwater is so far the only investment consulting firm to get into the liquid alts pool.


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