Multialternative Funds: Best And Worst Of November
Mutual funds and ETFs in Morningstar’s multialternative category generally suffered losses in November, with the average fund losing 0.20% for the month. Year-to-date through November 30, the category averaged returns of -1.24%, but over the longer term, multialternative funds have generated three-year returns of +2.95% with a Sharpe ratio of 0.58. That’s not bad, but not all that great, either – particularly when viewed in terms of beta and alpha relative to the Morningstar Moderate Target Risk Index , an index consisting mainly of traditional stocks and bonds. In this monthly review of the best and worst multialternative funds from November, only one of the six featured funds has a track record long enough to analyze its three-year returns – and it was the month’s very worst performer, too. This shows the emerging nature of the category, which typically combines several alternative strategies, often employed by different underlying managers, within a single ’40 Act mutual fund. (click to enlarge) November’s Best Performers The top-performing multialternative mutual funds in November were: The Catalyst Macro Strategy Fund returned an impressive +4.57% in November, but those seemingly stellar returns were barely above its 2015 monthly average. The fund’s one-year return through November 30 stood at a whopping +46.90%, which is an average of roughly 3.90% in gains per month. Even better, for the first eleven months of 2015, the fund averaged gains of roughly 4.76%, with year-to-date returns of +52.40% – wow! But the fund launched on March 11, 2014, and thus it doesn’t have a track record long enough to analyze its three-year returns in terms of beta and alpha. The LoCorr Multi-Strategy Fund also launched recently, on April 6 of this year, to have three years’ worth of returns. In November, it returned +3.14%, making it the second-best multialternative fund to own that month. Finally, the Natixis ASG Global Macro Fund rounded out November’s top three with gains of 1.99%. Year to date through November 30, the fund was down 2.65%. It launched in late 2014, and thus also lacks a sufficient track record to analyze further. (click to enlarge) November’s Worst Performers The two Virtus funds were the second- and third-worst multialternative funds in November, with respective one-month losses of 3.14% (VAIAX) and 2.69% (VSAIX). Both VAIAX and VSAIX have been hampered by the decline in the energy sector. Both funds were launched on the same day in 2014, and thus, they don’t have three-year return data, but they had posted respective one-year returns of -10.27% and -10.35% through November 30. The PSP Multi-Manager Fund was November’s worst-performing multialternative mutual fund, enduring losses of 4.77% for the month. This dropped the fund’s one-year returns through November 30 to a flat 0.00%, while its year-to-date returns through that date were still moderately in the black at +0.69%. Over the longer term, the fund generated annualized returns of +2.55% for the three years ending November 30, with a 0.97 beta and a -3.43 alpha. Its three-year Sharpe ratio stood at 0.32. (click to enlarge) Conclusion As a whole, Morningstar’s multialternative category had three-year returns of +2.59% through November 30. This month’s batch of multialternative funds mostly lacked the track records to evaluate in terms of three-year betas, alphas, and Sharpe ratios – and perhaps that says something about the category and the relative youth of many of the funds in the category. Past Performance does not necessarily predict future results. Meili Zeng and Jason Seagraves contributed to this article.