Stocks are richly valued and increasingly volatile, while low-yielding bonds have increasing duration risk, and cash has no yield – these are the reasons investors should consider investing in liquid alternatives, despite their comparatively poor performance over the past few years, according to Rick Lake of Lake Partners. Liquid alternatives can provide risk management, potentially differentiated returns, and diversification, so they’re key to help clients have a “smoother ride,” in Mr. Lake’s opinion.
In this video, Mr. Lake also looks at the different ways liquid alternatives can be used. He says they can complement equity holdings, complement fixed-income holdings, or be used as a portfolio diversifier. Global macro and managed futures strategies, in particular, have behaved much differently than traditional asset classes, and they have performed significantly better than their alternative peers over the past year.
Click here for Part I of this video series. For a list of all the exclusive DailyAlts videos, click here.