Michael Aronstein’s MainStay Marketfield has added its name to the list of funds badly bruised by China’s recent turmoil – as in really badly bruised. In short, the fund shrunk by more than three-quarters to $4.4 billion in 18 months.
But it’s not all down to the recent rout. Once the largest “liquid alternative” mutual fund, MainStay has been shedding investors since February – when the fund hit its $21.5 billion peak – on the back of poor fund performance. This is mostly down to badly timed bets on ETFs and Chinese equities.
The fund – which sells long/short equity strategies to small investors – rebounded earlier this week after it bet that a variety of indexes tied to the US market would decline in value, the Wall Street Journal reports, but the fund is now down 5.3% this year as of Wednesday.
The real damage however is that this episode has undermined industry efforts to bring more-sophisticated investment strategies to small investors and offers ammo to critics of liquid alternatives that argue small investors do not understand the asset class or the strategies involved.
Photo: Frankieleon