As we drift around all-time highs. some may be growing wary about a potential pullback or slower growth ahead. Consequently, investors may find that alternative investments and related exchange traded funds could help diversify a portfolio designed around traditional asset allocations.
Whether your objective is long-term diversification, or shorter-term tactical positioning, alternatives have an important role to play. Additionally, for the advisors who are interested in learning more about alternative investments and investing in ETFs, ETF Trends and RIA Database are hosting the annual ETF Virtual Summit, an online conference experience, on January 21.
Common liquid alternative funds cover a range of strategies, including bear market, multicurrency, single currency, long/short equity, market neutral, multialternative, managed futures and volatility, along with trading leveraged commodities, inverse commodities, leveraged debt, inverse debt, leveraged equity, inverse equity. These types of alternative ETF strategies diversify a portfolio since their returns are not closely correlated to stocks or bonds. Consequently, the alternative investments could help offset losses if equities or fixed-income assets begin to fall. [Investors May Be Overlooking Alternative Investments, ETFs]
The alternative investment ETF space is still relatively new but the nascent industry is growing. For instance, alternative investment providers like ProShares and Direxion have been expanding their line of ETF strategies to include investments beyond traditional broad stock market exposures. [Alternatives ETF in the Early Stages of Growth]
“Alternative investments have long been seen as an exclusive option of institutional investors, helping to enhance risk-adjusted returns,” according to ProShares. “Today, innovations in the mutual fund and ETF marketplace have made many of these alternative strategies available to a wider range of investors.”