'40 Act Compliance in Focus as Funds Introduce New Liquid Alts

Flexible reporting tools required as regulators consider further oversight.

Liquid alternatives — new post-crisis products meant to package risk into traditional structures like exchange-traded funds (ETFs) and mutual funds — are very much on the rise.

According to data from Vanguard, fully half of liquid alts' $449 billion in assets have been invested since 2013, as more investors chase alternatives-level returns without the requirement of qualified investment.

Some of these offerings have come from familiar giants, Vanguard included, but a sizeable chunk has also deve