With PE Backing, an Alts Fundster Offers FAs a Prescription For Full-Scale Diversification
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Thursday, April 16, 2015

With PE Backing, an Alts Fundster Offers FAs a Prescription For Full-Scale Diversification

Freshly backed by familiar private equity, a liquid alternatives mutual fund specialist is working on a new way to share his "prescription for full-scale diversification" with financial advisors (FAs).

Jerry Murphey, president and CEO of FolioMetrix [profile], confirms that the Portland, Oregon-based manager of managers is working on an FA dashboard, what he calls "kind of a Morningstar for tactical risk management." The dashboard would allow FAs to visualize mixing and matching different tactical risk management strategies from different managers, using a virtual 3-D cube to see what they want to add.

"We've already hired a programmer," Murphey said in recent interview with MFWire, adding that the second part, the virtual 3-D cube visualization, is "an app you can go out and buy" that engineers use for modeling.

The three axes of FolioMetrix's cube are: purpose (accumulation, income, or preservation), preferred market condition (bear or bull), and composition (equity, fixed income, or other).

Murphey aims to launch the dashboard this spring. He and his team already do the dashboard's work manually with individual advisors, and the FolioMetrix team white labels the process for large producer groups.

"It's a workflow front to back," Murphey says.

For FolioMetrix, the dashboard is a way to ease advisors into incorporating liquid alternatives into slices of clients' portfolios without simply wiping the entire slate clean.

"It's a much easier conversation when you're asking them to outsource the alternative or tactical sleeve of the portfolio as opposed to having them change their whole infrastructure," Murphey says.

FolioMetrix dates back to 2009. Prior to that, Murphey worked at Pru, helping FAs building portfolios using separate accounts. In 2013 FolioMetrix rebranded its mutual funds as the RiskX funds. And last year the asset management M&A specialist firm Grail Partners became a FolioMetrix backer.

"We got private equity funding in November," Murphey confirms.

The FolioMetrix has identified 320 money managers in the tactical risk management space, organizing them by 16 attributes and across equity, fixed income, alternatives, and allocation categories. They picked what they saw as the best managers and put their strategies inside '40 Act, open-end funds. They've created 11 funds so far, incorporating 42 different strategies within those funds, and earlier this year they crossed the $250-million-AUM mark.

Murphey envisions a day when the RiskX brand is a category brand like iShares or the old Rydex. And he's open to launching more funds, too.

"We're identifying a number of strategists that we think would add a lot of value," Murphey says. "We've been talking a lot about tactical fixed income ... There's a lot of risk out there in those [traditional fixed income] assets."

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