Virtus Investment Partners, Inc. (VRTS), which operates a multi-manager asset management business, announced that it has introduced three multi-manager alternative mutual funds that will employ a range of hedge fund and alternative strategies to provide individual investors the opportunity to more fully diversify their portfolios for improved consistency of returns over market cycles.

The new funds — the Virtus Alternative Total Solution Fund, the Virtus Alternative Inflation Solution Fund and the Virtus Alternative Income Solution Fund — are the first liquid alternative mutual funds subadvised by Cliffwater Investments LLC, a joint venture between Virtus and Cliffwater LLC, a leader in providing alternative advisory and asset management services to institutional investors.

Each of the funds is outcome-oriented and uses multiple diversified alternative strategies to address a particular investor need, ranging from core alternatives exposure to inflation protection or income generation. According to Barry M. Mandinach, executive vice president and head of distribution, the funds utilize Cliffwater’s top-down asset allocation process for portfolio construction, and leverage Cliffwater’s proprietary research and open-architecture approach to source a diverse selection of distinctive alternative managers.

Institutions have a long history of incorporating alternative strategies to manage their risk profile and deliver consistent, lower-correlated returns, Mandinach said. Now with the Virtus Alternatives mutual funds, individual investors can access the same caliber of strategies that are available to institutions with the additional benefits of daily liquidity, timely tax reporting, transparency, and a low minimum investment.

Mandinach said that the inherent unpredictability of financial markets, including the challenges in the current environment, demonstrate the benefits of adding alternatives to a portfolio. A portfolio too heavily invested in equities may not have adequate downside protection, and, with interest rates continuing to be near historic lows, a portfolio too heavily allocated to traditional fixed income may be overly exposed to the possibility of rising rates negatively affecting the value of their bonds and not offer the return potential many investors need to meet their financial goals. So the traditional approach to building a personal portfolio with a balance of equity and fixed income allocations may no longer be sufficient to deliver, on an aggregate basis, inflation-beating returns over time.

Financial advisors recognize that a meaningful allocation to alternatives may be necessary to serve as a diversifier to help buffer volatility and contribute to the growth that clients so desperately need going forward, said Mandinach. Incorporating alternative investments has been a time-tested approach to reduce portfolio volatility and generate more consistent results through market cycles.

About the funds

Cliffwater Investments utilizes a top-down dynamic strategic asset allocation combined with rigorous bottom-up manager research, selection and ongoing due diligence. It has identified 11 different institutional-quality alternative managers as subadvisers of strategies in the funds: Armored Wolf, Ascend Capital, Brigade Capital Management, Credit Suisse Asset Management, Graham Capital Management, Harvest Fund Advisors, ICE Canyon, LaSalle Investment Management, Lazard Asset Management, MAST Capital Management, and Owl Creek Asset Management.

Virtus Alternative Total Solution Fund allocates to a broad array of uncorrelated alternatives strategies in a diversified portfolio designed to provide the opportunity to generate a positive total return in various market cycles while maintaining a low correlation to traditional equity and fixed income markets. Strategies in the fund include long/short and event-driven long/short equity; event-driven and opportunistic credit; emerging market debt; convertible arbitrage; global macro; global inflation-linked; master limited partnerships (MLPs); infrastructure, and real estate securities.

Virtus Alternative Inflation Solution Fund seeks to supplement a traditional portfolio by providing total return that exceeds the rate of inflation for investors who are concerned about potential rising inflation. Strategies in the fund include commodities; infrastructure; real estate securities; MLPs; opportunistic credit; and global inflation linked.

Virtus Alternative Income Solution Fund seeks to improve the income-generating potential of an investor’s portfolio by allocating to a variety of uncorrelated, alternative income sources. Strategies in the fund include event-driven and opportunistic credit; emerging market debt; MLPs, real estate securities, and global equity income.

Source: Company Press Release