For the first time since the financial crisis, there were net outflows from the overall category at the end of 2014. Investor interest, however, has ramped up again, with the rise in volatility in the stock market.
So far this year, the hottest tickets are the multi-alternative strategy funds that combine a variety of alternative investing strategies and managed futures funds that typically follow trends in commodity and currency prices.
Between them, they've taken in more than $17 billion so far this year, more than making up for big outflows from formerly popular categories, like long/short equity funds and market neutral funds.
"The space is so new that you see a lot of performance chasing," said Morningstar analyst Jason Kephart. "The flows are exaggerated, going up and down."
After a long period of underperformance following the financial crisis, the managed futures funds have benefited from strong trends in commodity prices — most notably oil — and in currency movements (i.e., the strong U.S. dollar). The largest such fund, the AQR Managed Futures Strategy Fund, manages $9.6 billion in assets.