Finally, we’d like to note that the same arguments that support actively managed fixed income also support actively managed alternative investing. Alternatives by their very definition offer unique and innovative strategies in newer financial markets that are less heavily researched and less liquid. Nimble and efficient trading, a lack of transparency — which enables managers to hide their trades somewhat — and the ability to harvest liquidity premia are strong arguments for the mutual fund structure within alternatives. Alternative ETFs are much less able to harvest these sources of return, as they must be transparent and liquid enough to liquidate at any time due to their structure.
Mason Wev, CFA, CMT is a Portfolio Manager at Clark Capital Management Group, a participant in the ETF Strategist Channel.
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