Liquid alt funds are on track to break last year’s record of $38.3 billion worth of net inflows.

As the standard 60/40 portfolio allocation looks increasingly shaky, a hunt is afoot for alternative products, and liquid alternatives are tracking higher on investors’ radars. Fidelity Investments launched last week the Fidelity Macro Opportunities Fund (FAQFX) and Fidelity Risk Parity Fund (FAPZX), two new mutual funds marking the firm’s foray into liquid alternatives. (Investment News)

60/40 clearly not working

“If you’re Fidelity and looking at the road map ahead, 60/40 looks like trouble for a while,” said Eric Balchunas, fund analyst at Bloomberg Intelligence, in this context. “This makes sense to me, plus you can charge more for alternative strategies,” he added.

“Fidelity is making a significant strategic commitment to creating world-class alternative investment capabilities and leveraging its strength and scale to develop and deliver innovative products and solutions that help meet the evolving needs of our clients,” said Vadim Zlotnikov, president of Fidelity Asset Management Solutions.

“In any market environment, we believe that portfolio diversification is critical and see liquid alts as a potential opportunity for advisers to round out an investor’s portfolio through alternative sources of alpha and strategies that are generally less correlated with broader financial markets,” he added.

Fidelity Risk Parity Fund (FAPZX)

The fund is a global multi-asset liquid alternative strategy that is designed to diversify risk instead of capital. The fund seeks to improve portfolio resiliency through robust diversification across multiple dimensions: risk factors, market regimes, and time horizons.

The fund invests across the globe in a broad set of asset classes via derivatives, exchange traded products and/or mutual funds to gain the desired investment exposure and manage volatility.

Fidelity Macro Opportunities Fund (FAQFX)

For investors seeking potential attractive risk-adjusted returns uncorrelated with traditional asset classes. The fund is a strategic allocation liquid alternative strategy. It seeks to create value by identifying differences between what is expected by the market and what is indicated using fundamental and quantitative analysis, while minimizing correlation to the equity market.

The fund invests globally, employs leverage, and allocates long and short positions across asset classes, market sectors, and geographies.

The fund invests in derivatives, exchange traded products and/or mutual funds to gain the desired investment exposure and manage volatility.

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