The number of liquid ’40 Act mutual funds employing alternative investment strategies is growing, even as investors have little to benchmark them against. Stepping into the void is Wilshire Associates Inc., which last month launched two liquid alternative investment indexes.

Wilshire estimates the number of liquid alternative funds has grown from about 75 at year-end 2008 to 450 mutual fund products as of June 2014. The Wilshire Liquid Alternative Index is a broad market measure that divides that universe into five different categories: equity hedge, event driven, global macro, relative value or multi-strategy.

Returns for this index are available on a daily basis from December 31, 2013, and on a monthly basis from December 31, 1999.

Constituent mutual funds in the Wilshire Focused Liquid Alternative Index are screened on criteria such as track-record longevity, correlation to equities and fixed income, and assets under management. Wilshire says this index comprises a subset of the broad market index and uses intelligent screening criteria aimed at helping companies build investable products––such as ETFs––that can deliver optimal risk-adjusted performance.

The new indexes tap into the know-how of two Wilshire business units: Wilshire Funds Management and Wilshire Analytics. The former is the firm’s investment management arm, which advises on more than $130 billion in global assets, including traditional and alternative investment strategies. The latter is the technology foundation of Wilshire and the creator of the Wilshire 5000 index.

“Alternative investments are inherently designed to behave differently than traditional asset classes, so comparing them to well-established, long-only indices is counterintuitive,” said Jason Schwarz, president of Wilshire Funds Management. “Hedge fund indices are not a suitable proxy either, as their constituents may access more illiquid investments or deploy greater levels of leverage than is permissible under the regulations of the Investment Company Act of 1940.”