Alternative ETF Strategies to Prep a Portfolio Against the Unknowns

Investors should consider alternative investments and exchange traded fund strategies to better diversify a traditional portfolio mix against potential risks that can suddenly pop up.

“We were pretty constructive on the outlook. We had Phase 1 agreement on trade deals with China. We had an agreement on trade with Canada and Mexico. We had a budgetary. There were a whole bunch of positives going into the new year. But of course, that quickly gets derailed by geopolitical events, whether it’s the issue with Iran, we have the coronavirus command of China. So, we’ve been talking to clients about is always be prepared, have alternatives in your portfolio,” Sal Bruno, Chief Investment Officer, Managing Director, IndexIQ, said at the Inside ETFs conference.

ETF investors who are interested in alternative strategies can look to a number of various options. For example, the IQ Hedge Multi-Strategy ETF (NYSEArca: QAI) provides a diversified mix of alternative strategies, including multiple hedge fund investment styles, such as long/short equity, global macro, market neutral, event-driven, fixed income arbitrage and emerging markets.

The IQ Hedge Long/Short Tracker ETF (NYSEArca: QLS) is designed to mirror hedge funds’ long/short strategies.

The IQ Hedge Macro Tracker ETF (NYSEArca: MCRO) tries to replicate the risk-adjusted return characteristics of a global macro strategy that takes long and short positions on various assets based on the overall economic and political views of a number of countries or their macroeconomic principles.

The IQ Hedge Market Neutral Tracker ETF (NYSEArca: QMN) tries to give consistent returns in any market with low volatility.

The IQ Hedge Event-Driven Tracker ETF (NYSEArca: QED) is designed to mirror hedge funds’ event-driven strategies.

Lastly, the IQ Merger Arbitrage ETF (NYSEArca: MNA) employs a type of alternative, “directional hedge fund strategy” called merger arbitrage where the fund tries to capture the spread or difference between a stock’s trading price before a deal is announced and its eventual takeover price.

Watch Sal Bruno Discuss Alternative ETF Strategies:

For more ETF-related commentary from Tom Lydon and other industry experts, visit our video category.