Investors In Allianz Global Investors Structured Alpha Funds Suffer Losses

At the end of March 2020, Allianz Global Investors (Allianz) liquidated two investment vehicles—Structured Alpha 1000 and 1000 Plus—following substantial losses to the funds, resulting in clients losing millions of dollars. According to news reports, other related Allianz Funds, including Structured Alpha 250, 350, and 500, also suffered heavy losses. Recently, the Securities and Exchange Commission (SEC) requested information about the funds.

The Structured Alpha Funds were a group of investment opportunities offered and managed by Allianz Global Investors. According to marketing materials incorporated into a recent lawsuit against Allianz, the three main principles of the Alpha Funds’ strategy were:

Capitalize on long-term and short-term volatility;
Perform irrespective of the market environment; and
Employ a three-prong strategy that will (1) profit during normal market conditions, (2) protect against a market crash, and (3) navigate as wide a range of equity-market outcomes as possible.

According to a brochure available through Allianz’s website, “[t]he Allianz Structured Alpha strategy aims to provide consistent, uncorrelated returns regardless of the direction of equities and volatility.” These materials emphasize risk-control, reliability, and lack of correlation to market fluctuations.

The Structured Alpha funds were apparently buying puts, or options giving the holder the right to sell the investment at a predetermined right in the future. This strategy was purportedly supposed to hedge against losses associated with a market decline. Unfortunately, this strategy failed to withstand the March 2020 market selloff associated with the coronavirus crisis and corresponding volatility.

Lawsuit By Institutional Investor Arkansas Teacher Retirement System Highlights The Alleged Mismanagement That Led To The Losses

According to a lawsuit filed by the Arkansas Teacher Retirement System (ATRS), which lost hundreds of millions in the Structured Alpha Funds, Allianz “improperly invested client assets, employed a reckless strategy contrary to its obligations to ATRS, and abandoned the risk controls it was required to have in place.” Furthermore, ATRS alleges Allianz “in violation of its contractual and fiduciary duties, first abandoned the Funds’ stated investment mandate, and then ‘doubled down’ on its imprudent strategy after incurring losses, at the very time conservative positions against increasing market volatility were needed most.”

The suit alleges negligence, breach of fiduciary duty, and breach of contract in connection with losses of $774 million.

Did You Lose Money Investing In An Allianz Structured Alpha Fund?

Financial advisors and brokerage firms have a duty to conduct due diligence on investments they recommend and to only make investment recommendations that are “suitable.” Put otherwise, investment recommendations must correspond with an investor’s age, financial resources, investment objectives, time horizon, risk tolerance, and otherwise. Accordingly, Silver Law Group is investigating claims that these Structured Global Funds were flawed products that were highly speculative.

Silver Law Group represents the interests of investors who have been the victims of investment fraud. Managing Partner Scott Silver is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and represents investors nationwide in securities investment fraud cases. Silver Law Group represents investors in securities arbitration claims. Please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.