Investors who bought “alternative” investments believed that these assets would have low correlations and great rewards, but some got burned by that thinking. Exchange traded funds (ETFs) are a viable and less risky way to gain access to this area of the market.

Alternative asset classes usually depend on sophisticated financial instruments and some produced higher returns by being exposed to high leverage, according to Reuters. As credit dried up, investors were left with assets that were valued at substantially lower prices. [The Pros and Cons of ETFs.]

There are a variety of ETFs that deal in alternative asset classes. For instance, commodity ETFs provide investors exposure to commodity investments without the necessity of taking delivery of the physical stocks. For private equities and infrastructure, investors may use ETFs that reflect a underlying index of the specific sector. [Commodity ETFs and Contango.]

The great thing about ETFs is the ease at which you can transition in and out of the investment, since most well-established ETFs are highly liquid and all ETFs can be traded like stocks on an exchange during normal trading hours.

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