With volatility shaking up the markets, investors and financial advisors may consider including some alternative investments into an investment portfolio to help smooth out the ride.

While the equities market are trading near full value at best and bonds are being threatened with the prospect of rising interest rates, investors may want to take a look at alternatives.

“What do you do in that environment for returns?” Nadia Papagiannis, director of alternative investment strategy at Goldman Sachs Asset Management, asked InvestmentNews. “We think alternatives are the answers to that.”

The equities market experienced a wild swing in late August, but alternative investments provided some with a more stable return during the sudden market correction. [Alternative Investments Provided Portfolio Stability During Recent Correction]

However, advisors have not pulled the trigger on alternatives. According a Aite Group study that surveyed 338 advisors in 2014, alternative investments represented only 5% of products advisors chose to include in client portfolios.

Papagiannis pointed to four hedge fund-esque strategies that could help investors diversify a portfolio, including equity long-short; relative value, or the difference between two similar securities; event-driven, which are similar to merger funds trying to cap profit from corporate events; and tactical macro, which adapts to ongoing trends.

Investors can also tap into these alternative strategies through specialized ETFs. For instance, the First Trust Long/Short Equity ETF (NYSEArca: FTLS) and ProShares RAFI Long/Short ETF (NYSEArca: RALS) are two long-short strategies that take both long positions in U.S. equities and pare bets with short positions.

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