Most people have filled out their investments with a mix of stocks and bonds. However, investors can also add in exchange traded funds that track alternative assets to help diversify a portfolio.

“With the current bull market now in its sixth year and stocks appearing to be slightly overvalued (based on Morningstar analysts’ estimates), and with interest rates poised to rise, neither stocks nor bonds look particularly attractive right now,” writes Adam Zoll for Morningstar. “Plus, with the 2008 market swan dive still on many investors’ minds, some are seeking out funds designed to mitigate the potential damage of a repeat performance.”

Consequently, for those who are interested in diversify an investment portfolio, alternative assets can provide uncorrelated returns to traditional stocks and bonds.

Alternative funds, which track hedge fund-esque strategies, are comprised of a wide range of different investment styles designed to provide exposure to stocks in a nontraditional manner.

For example, investors can take a look at two recently launched alts strategies, the ProShares Morningstar Alternatives Solution ETF (NYSEArca: ALTS) and PowerShares Multi-Strategy Alternative Portfolio (NasdaqGM: LALT). [Alternative ETFs for Conservative Investors]

ALTS acts like a sort of fund-of-funds, tracking a Morningstar index comprised of ProShares ETFs. The ETF includes exposure to long-short strategies, hedge fund replication, managed futures, global infrastructure, merger & acquisitions, private equities and Treasury spread. [How an Alternative ETF Strategy Fits in Investment Portfolios]

The actively managed 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. The fund includes long and short positions in G-10 currency forwards, stocks and VIX index futures, along with a significant long position in interest rate futures. [Diversify with Liquid Alternative ETFs]

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