Lastly, the global macro based strategy tries to exploit macro economic imbalances across the globe. The strategy may be implemented through a number of asset classes, including stocks, bonds, currencies and commodities.
The group of liquid alternative funds has been a growing investment category following the financial downturn as more investors turned to alternative investment avenues in an attempt to diversify their portfolios. The group of liquid alt funds that categories like equity long/short, event driven, relative value, macro and multistrategy often did better than the hedge fund indices.
Liquid alternative funds provided a much cheaper way to access the same kind of hedge fund-esque exposure – hedge funds may include a normal management fee of 1% to 2% on top of a performance fees of as much as 20% of annual gains.
Potential investors should be aware that these types of investments are not meant as growth strategies to generate outsized returns in investment portfolios. In reality, these strategies are doing exactly what they were made for, diminishing volatility. Consequently, in bullish market conditions, the strategies may underperform, but if the markets sour, alts can shine.
Financial advisors who are interested in learning more about alternative investment strategies can register for the Thursday, September 15 webcast here.