Alternative Investments: Liquid Alt ETF Provider Accelerate Offers Ready-Made Alternative Investment Strategy

October 5, 2020 | Alternative Investments, News

Accelerate Financial’s no-sweat solution to alternative investments is a boon for advisors.

Last month, Accelerate Financial Technologies launched the OneChoice Alternative Model Portfolio. It’s a quick and easy route to gain exposure to a collection of alternative investment strategies as a diversification to a client’s core portfolio.

OneChoice Alternative Model Portfolio

Accelerate Financial Technologies has been a cheerleader for bringing alternative investments to retail customers. Its liquid alternative ETFs span strategies such as arbitrage, Alpha + Beta, private equity replication, and a long-short absolute return strategy. It deems itself a leader in hedge fund and private equity ETFs.

Heading further down the path of innovation in alternative investments, the firm has devised the OneChoice Alternative Model Portfolio for hard-pressed advisors and portfolio managers.

The Model Portfolio targets an annualized volatility of 8% and a low correlation to stock and bond portfolios. It allocates to alternative asset classes such as:

  • Absolute Return – arbitrage and long-short equity;
  • Private Credit – mortgages and leveraged loans;
  • Real Assets – infrastructure and real estate;
  • Alternative Currencies – gold and Bitcoin;
  • Private Equity – buyouts; and
  • Alternative Equity – alpha + beta

Accelerate’s model takes away the grunt

“What we’ve determined from our discussions with clients is that putting together a diversified alternative sleeve within their client portfolio is extremely time- and work-intensive,” Julian Klymochko, founder and CEO at Accelerate, told Wealth Professional. “Many adviser groups just don’t have the time or manpower required per year to achieve wide diversification across alternative assets.”

Without the heavy lifting of alternatives’ selection, assessment of strategies, subscriptions and redemptions, and rebalancing, advisors are free to service clients in more value-adding ways and build client relationships.

Risk diversification

Klymochko cites the tremendous recent volatility in equities and the all-time historic low yields in fixed-income markets as danger signals for the traditional [60:40] portfolio.

He observes that many institutional investors, including pension funds, have allocated up to 50% of their portfolios in alternatives. In fact, Accelerate is inspired by Yale’s portfolio which it “perfected over the past number of decades.”

“We wanted to provide advisors and individual investors with easy and low-cost access to that type of alternative portfolio.”

Such a portfolio lowers risk while increasing risk-adjusted returns. Klymochko advises a new 50-30-20 allocation mantra: 50% in equities, 30% in fixed income, and 20% in alternatives.

And soon, the OneChoice Alternative Model Portfolio may be offered as an ETF with a low fee of just 20 bps.

Related Story: Illinois Municipal Fund Earmarks $125 millions for Alternative Investments

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