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Jeff Whitmoyer

Wells Fargo’s first multi-strategy liquid alternatives fund celebrates one-year anniversary


Wells Fargo Funds Management’s multi-strategy Wells Fargo Advantage Alternative Strategies Fund, the result of a collaboration between Wells Fargo Asset Management and The Rock Creek Group, has passed it’s first anniversary.

The fund was designed to provide a truly diversified portfolio by complementing traditional asset classes with investments that offer the potential for different outcomes when responding to changes in the investment climate. The fund gives investors access to a broad range of hedge fund-like strategies designed with the goal of providing consistent returns and lower volatility in a variety of market environments. As the overlay sub-advisor, Rock Creek employs a multi-strategy, multi-manager approach that provides access to experienced institutional hedge fund managers within the structure of an Investment Company Act of 1940 mutual fund.

“Over the course of the past year, investors experienced a shifting macroeconomic landscape that was additionally influenced by consistently low interest rates,” says Jeff Whitmoyer, head of Asset Allocation and Alternative Investments for Wells Fargo Funds Management. “Oil prices fell by 50 per cent; the European Central Bank commenced its bond-buying program; the US dollar saw significant appreciation relative to most foreign currencies; and while US equities avoided a correction, results were mixed.

“With these events as a backdrop, as of 30 April, 2015, the fund’s one-year return for the Institutional Class was 8.1 per cent with a standard deviation of 3.1 per cent, which is approximately midway between the returns of the broad stock and bond markets, as measured by the S&P 500 Index and the Barclays U.S. Aggregate Bond Index. It ranked in the eighth percentile in Morningstar’s multialternative category. While acknowledging that a year is a short period in which to evaluate a fund’s results, we believe that the fund’s performance provides a strong data point that helps validate our investment approach.”

Rock Creek’s management team structures portfolios to pursue a specific outcome for investors, first by forming qualitative judgments to take advantage of market trends and then by using quantitative analysis to monitor and validate assessments.

They strategically select hedge fund strategies and managers to play a specific complementary role in the fund’s overall portfolio. Rock Creek’s manager selection criteria include a customised, proprietary due diligence process that assesses the operations, performance, manager structure, portfolio construction, and risk of underlying investment managers.

The fund invests in four alternative investment strategies:

• The equity hedged strategy takes both long and short positions in equities or related instruments believed to be under- and overvalued.

• The global macro strategy analyses economic variables in an attempt to forecast future movements in equity, fixed-income, currency, and commodity markets.

• The relative value strategy seeks to identify and capitalise on valuation discrepancies between related financial instruments rather than on the direction of the general market.

• The event driven strategy seeks to capitalise on the movements in security prices of companies currently or prospectively involved in a wide variety of corporate transactions.

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