These examples have provided refuge in volatile times. Perhaps most importantly, in each week that stocks and bonds both fall, at a minimum one of the three ETFs listed has been positive, suggesting combining uncorrelated strategies makes a lot of sense. Those critical of alternatives, especially ETFs, should bear in mind the benefits of these products in such an environment, and users of alternative mutual funds should consider the benefits of cutting their costs in half (and then some).
The potential for growth in the alternative ETF space is tremendous. However, it will likely take established alternative asset managers to enter the ETF space in order to spark this growth. JP Morgan Asset Management launching a multi-alternative ETF this year is a great sign (it’s already one of the largest in the space). Others will have to grapple with cannibalization of their own higher-margin funds and strategies if they want to move into the space. However, as any true ETF believer will tell you, not launching an ETF is delaying the inevitable!
Grant Engelbart is a Portfolio Manager at CLS Investments, a participant in the ETF Strategist Channel.
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This information is prepared for general information only. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. The graphs and charts contained in this work are for informational purposes only. No graph or chart should be regarded as a guide to investing.
While some CLS portfolios may contain one or more of the specific funds mentioned, CLS is not making any comment as to the suitability of these, or any investment product for use in any portfolio. This information is for illustration purposes only and may not be representative of current or future portfolios. The information should not be considered investment advice. Past performance is not a guide to future results. 2785-CLS-12/21/2016