Non-traditional, alternative asset-based exchange traded funds can help investors diversify away from traditional stocks and bonds, providing uncorrelated returns that can help generate better risk-adjusted returns.
In the upcoming webcast, Liquid Alternatives: Bridging the Gap for Retail Investors, John G. Feyerer, head of product strategy & research at PowerShares, Jason Stoneberg, director of research at PowerShares, and Ted Samulowitz, portfolio manager for PowerShares, help define alternative strategies and explain how the investment styles can help diversify a portfolio.
Most retail investors are loath to include liquid alternative assets because of a dearth in access and knowledge to the investment strategies. However, with ETFs, investors may find greater transparency and understanding into the investments.
Specifically, alternative strategies help investors diversify away from their traditional equity and fixed-income exposure. For instance, alts assets like commodities help hedge against inflation. Dividend-generating assets such as master limited partnerships and real estate investment trusts help diversify away from traditional dividend and bond holdings. Additionally, alts cover hedge-fund-esque strategies, employing long/short positions and factor-based investments. [Alternative ETF Strategies To Reduce Portfolio Risk]
For instance, the actively managed PowerShares Multi-Strategy Alternative Portfolio (NasdaqGM: LALT) tries to provide positive total return with a low correlation to broad securities and can be used as a fixed-income substitute. LALT holds a combination of equities, along with financial future contracts, forward currency contracts and other securities.