Quilter's multi-asset Cirilium range has provided the seed investment for the launch of the State Street Global Alternative Beta fund.

The fund seeks to deliver similar returns to hedge funds as a broad asset class and is managed in reference to the HFRX Global Hedge Fund index, which represents a broad range of hedge fund strategies including equity hedge, event driven, macro/commodity trading advisor and relative value arbitrage.

Sacha Chorley, portfolio manager of Quilter Cirilium, said: "We’re pleased to partner with SSGA to offer our passive fund of fund clients access to the diversification benefits of alternatives. Alternatives are a key component of our portfolio construction, as they complement more traditional risk diversifiers of cash and bonds and have proven to reduce the drawdown risk of multi-asset investments in volatile markets.”

"Historically, there has been a lack of availability of passive exposures of the alternatives universe, and SSGA has developed a unique replication methodology that captures the essence of the alternatives universe with minimal complexity. We are excited to work with SSGA to bring this innovative solution to our clients."

The fund aims to determine which market factors have been driving hedge fund returns recently and replicates those exposures. This should increase liquidity compared to directly investing in hedge funds while keeping costs down.

As we have covered in the past, alternatives tend to be significantly more expensive than equity funds or fixed income funds. This, in part, fuels the uncertainty some portfolio managers have towards these funds - particularly when they can fail to achieve their stated goals. After all, how many absolute return funds actually provide, you know, an absolute return year after year?

Will the development of cheaper, tracker alts change this calculation? That will depend on whether they do what they say they will, so Quilter's willingness to invest early puts a lot of faith in State Street's processes.