Virtus Investment Partners and Cliffwater have established Cliffwater Investments, an investment adviser that will sub-advise a series of multi-strategy, multi-manager alternative mutual funds for retail investors.
The new venture will leverage Cliffwater's expertise in portfolio construction and its research of more than 4,000 alternatives managers. Its open-architecture approach to selecting managers is used by some of the largest institutions, pension funds and endowments. Cliffwater has approximately USD70bn of assets under advisement, including approximately USD52bn in alternative strategies.
The first set of funds that will be sub-advised by Cliffwater Investments will be Virtus Alternative Total Solution Fund, Virtus Alternative Income Solution Fund, and Virtus Alternative Real Assets Solution Fund. Each fund is intended to improve an investor's risk/return profile through diversification and lower correlation to the broad equity and fixed income markets and will feature allocations to multiple alternative strategies from leading hedge fund and alternative investment managers sourced and rated by Cliffwater. Virtus has filed a registration statement with the Securities and Exchange Commission for the three funds.
"There is a growing understanding among financial advisors that portfolios constructed primarily with traditional equity and fixed income securities are reliant on an ongoing bull market and low interest rate environment to address their clients' needs," says George R Aylward (pictured), Virtus' president and chief executive officer. "In order to meet their long-term financial goals, investors need to consider alternative strategies that typically have been available only to institutional investors and high-net-worth clients. Through our partnership with Cliffwater, we can give clients access to institutional-quality alternative investment managers in a retail mutual fund that has the benefits investors appreciate: daily liquidity, timely tax reporting, transparency, and affordability.
"We are leveraging Cliffwater's expertise in alternative investments to develop open-architecture, multi-strategy, multi-manager alternatives funds. Cliffwater is well-regarded as an alternatives research and advisory firm, and with its institutional experience and disciplined approach to risk management, manager sourcing, and portfolio construction, it is the right partner to help us solve the evolving needs of retail investors.”
Stephen Nesbitt, chief executive officer and founder of Cliffwater, says: “Institutions have long embraced alternative investments because they understand the benefits of generating more consistent returns and better managing their risk profile. For the past decade, we have provided institutional clients with full-service support for their alternative strategies. Our experience with the largest and most sophisticated institutional investors, proprietary analytical tools and distinctive research approach gives us extensive access to some of the best alternative managers.
"Both Cliffwater and Virtus bring to the partnership unique skills and expertise that, when combined, can produce significant opportunities for the retail investor. We conducted an extensive search to find the best asset management partner to bridge the gap from serving large institutional clients to retail investors, and after meeting with many mutual fund firms, it was obvious that Virtus had the right combination of leadership, experience and market position that Cliffwater was looking for in a long-term strategic partner.