Some liquid alternatives mutual funds are living up to their promise and making hay amidst the market craziness, yet they don't hold a candle to the winners on the illiquid alts side.

Bloomberg and others have highlighted the success last month of Cliff Asness' four-star, silver-rated, $9.2-billion AQR Managed Futures Strategy Fund [profile]. Per Bloomberg, as global markets shook in August, this AQR mutual fund brought in $360 million in net inflows and rose 1.4 percent for the month through August 28.

Compare that to Universa Investments, the hedge fund that The Black Swan author and NYU professor Nassim Taleb has a hand in. Barron's, DealBreaker, MarketWatch, and the Wall Street Journal all note that the hedge fund rose about 20 percent on a single day, Monday, August 24, and gained $1 billion (that's performance, not inflows) over the course of that week.

Liquid alt mutual funds, of course, can't use the same tricks as a hedge fund. Mutual funds' use of leverage is limited, as is their use of illiquid investments, yet both of those tools can be used to boost performance for hedge funds. So even when some mutual funds shine, it's not surprising to find some hedge funds shining a little brighter, perhaps by simply taking a similar strategy and just amping it up a notch or two.  

Edited by: Neil Anderson, Managing Editor


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