During the first quarter of 2016, many previously-popular alternative mutual funds experienced outflows. While the mutual fund industry gathered $24.1 billion of fresh money in the first three months of the year (excluding money markets), according to Lipper data, led by $27.1 billion from taxable and tax-free bond mutual funds, alternatives had $15.8 billion of outflows.

S&P Global Market Intelligence thinks in prior years the appeal for alternative mutual funds was that they are less correlated with traditional equity and fixed income funds that buy individual securities in hopes of capital appreciation and income generation. After the great recession, investors sought out alternative strategies focused on analysis of interest-rate trends or that sold short stocks or bonds in hopes that these would perform better when the market sold off.

However, the appeal appears to be dissipating, as 18 of the 20 largest alternative mutual funds had outflows in March, even as they employ different strategies.

For example, according to Lipper, alternative global macro funds are those that, by prospectus language, invest around the world using economic theory to justify the decision-making process. The strategy is typically based on forecasts and analysis about interest rate trends, the general flow of funds, political changes, government policies, intergovernmental relations, and other broad systemic factors.

The average fund in this Lipper peer group fell 5.13% in 2015, underperforming the 2.33% decline for the average U.S. equity and 1.87% decline for the average taxable bond mutual fund. Even though the performance for many funds improved and resulted in gains in the first quarter, the relatively weak 2015 performance contributed to the outflows, according to S&P Global Market Intelligence.

Alternative global macro funds had $9.9 billion in net client withdrawals in the first quarter of 2016, hurt by $3.8 billion in March alone.

PIMCO All Asset Fund (PASAX 11 NR), the second-largest alternatives portfolio and largest global macro fund with $19 billion in assets under management, saw its asset base shrink by $980 million in March 2016, bringing the asset decline to $2.3 billion for the first quarter of 2016. PASAX's 9.3% decline in 2015 was even worse than its peers, though its 5.2% first quarter gain was stronger than the 0.76% for its brethren.

Ivy Asset Strategy (WASCX 20 NR), a $10 billion portfolio, saw a larger $1.5 billion outflow in March, pushing its first quarter shrinkage to $4.2 billion. WASCX, which is managed by Waddell & Reade, had a wider 2015 loss than its peers, with a 9.05% decline. The fund declined an additional 5.29% in the first quarter of 2016.

Another investment style out of favor in 2016 was alternatives credit focus. The Lipper peer group had $8.7 billion in outflows in the first quarter, with $2.4 billion

Alternative credit focus funds are those that by prospectus language invest in a wide range of credit-structured vehicles by using either fundamental credit research analysis or quantitative credit portfolio modeling trying to benefit from any changes in credit quality, credit spreads, and market liquidity.

BlackRock Strategic Income Opportunities Portfolio (BSIIX 10 NR) is the largest portfolio in this style with $30 billion in assets. But it had $220 million and $897 million in net client withdrawals in March and the first quarter, respectively. In 2015, the portfolio had $6 billion of inflows. Relative to its peers and more traditional taxable bond funds, BSIIX's 1.3% 2015 decline was more modest, but the 0.8% loss in the first quarter of 2016 was wider than the 0.02% gain for its peers.

Meanwhile Goldman Sachs and JPMorgan each had large outflows this year in their flagship alternative mutual funds.

Goldman Sachs Strategic Income Fund (GSZAX 9 NR), a $13.7 billion-asset portfolio, had $8.4 billion of outflows in 2015. The fund declined 1.66% in the first quarter of 2016, which we think caused ongoing concern among investors. Withdrawals of $835 million in March alone continued the shareholder trend.

JPMorgan Strategic Income Opportunities Fund (JSOAX 11 NR), a $13.31 billion portfolio, had $7.61 billion in outflows in 2015 and net withdrawals continued thus far in 2016. Despite rising 1.1% in value in the first quarter last year, the portfolio had $2.6 billion of outflows.

While alternative funds were generally out of favor in the first quarter, there were a few bright spots.

BlackStone Alternative Multi-Strategy Fund (BXMDX 10 NR) gathered $551 million of net inflows during the first quarter even as it lost 3.1% in value.

Reports on these funds can be found on MarketScope Advisor. Note that while Lipper asset flows are at the portfolio level, performance details are specific to the largest retail share class.