While some investors chase after outsized growth, others may just want to generate steady returns. Consequently, some investors are looking into alternative strategies and related exchange traded funds.
“One thing that comes up frequently in conversations with investors is they want less of a high-octane alpha generating product and more of something that helps deliver an outcome,” Ju-Hon Kwek, an associate principal at McKinsey & Co, said in a Bloomberg article, pointing to strategies like diversification or protection against inflation.
For instance, BlueMountain Capital Management LLC has found stability in alternative investments, such as hedge fund strategies and commercial real estate.
The company continues to “find good investment and trading opportunities, without betting red or black,” according to BlueMountain.
ETF investors can also gain exposure to these areas of the market. For example, the Vanguard REIT ETF (NYSEArca: VNQ) provides broad exposure to the U.S. real estate market. Investors can also take targeted exposure to the space through the iShares Industrial/Office Real Estate Capped ETF (NYSEArca: FNIO), which focuses on industrial and office space.
Additionally, ETF investors can mimic hedge fund strategies like long-short styles that aim to generate returns regardless of broad market conditions. The ProShares RAFI Long/Short ETF (NYSEArca: RALS), which is based on strategies developed by the “father of fundamental indexing,” Rob Arnott, and the ProShares Hedge Replication ETF (NYSEArca: HDG) both utilize long and short positions to diminish market risk. [Generate Low Risk-Adjusted Returns with Alt ETFs]