Investment Strategies

Provided below is a full listing of liquid alternative investment strategies (or categories) covered by DailyAlts and a short description of each strategy. Within each category, you will find a listing of mutual funds, exchange traded funds (ETFs) and closed-end funds that fit within that particular category.

Investment StrategyDescription
Alternative Fixed IncomeAlternative Fixed Income strategies are generally designed have greater flexibility in their investment mandates which allows them to use shorting, leverage and derivatives. Many of these funds aim to hedge out some of the duration and credit risk found in most long-only fixed income strategies.
Alternative IncomeAlternative Income strategies provide investors with sources of income that are differentiated from that of traditional fixed income investments. This includes strategies such as master limited partnerships, high-yield fixed income, bank loans, preferred stock, business development companies, mortgage REITs and emerging market debt.
ArbitrageArbitrage strategies generally aim to provide investors with a return that is derived from taking offsetting positions in two or more securities that will ultimately converge (or diverge) in price and generate a positive return to the investor. Common forms of arbitrage strategies include merger arbitrage and convertible bond arbitrage.
CommoditiesCommodity strategies aim to provide investors with returns that are differentiated from financial assets such as stocks and bonds. As inputs into the production of goods and services, commodities are priced based on current and anticipated demand for the specific commodity, and often have a high degree of correlation with inflation.
Global MacroGlobal macro strategies typically invest across all asset classes on a global basis. They employ both long and short investments, may use leverage and derivatives, and may also take more concentrated positions than other alternative strategies. Global macro strategies typically take a top down approach to looking at major themes in the global economy, and position their portfolio to take advantage of perceived mis-pricings within the global financial markets or take advantage of potential geopolitical events.
Hedged EquityHedged equity strategies typically provide investors with lower volatility exposure to the equity markets and reduced downside risk through the use of portfolio hedging techniques. These strategies take many forms and include long/short equity, covered call writing, multi-hedge strategies and low volatility equity. Each of these strategies utilize a varying approaches to generate excess returns and/or provide a hedge against declining equity markets.
Managed FuturesManaged futures strategies generally invest both long and short in futures, options and forward contracts on equities and fixed income securities, currencies, interest rates, and commodities. The strategies typically utilize proprietary trading strategies designed to capture trending price movements based on either long or short trading signals. Trades may be short, medium, or long term. Managed futures have historically displayed low correlations to traditional investments, such as stocks and bonds.
Market NeutralMarket neutral strategies aim to provide investors with positive returns through varying market cycles by investing both long and short within a specific asset class, such as equities, with little to no market exposure. Returns are generated from the spread in returns between the long positions and the short positions, plus a return on cash held in the portfolio.
Multi-StrategyMulti-strategy products typically provide investors with more diversified exposure to a combination of alternative investment strategies and often have the ability to manage allocations to each of the underlying investment strategies based on their expected return potential. Some multi-strategy products use multiple managers while others use a single investment firm to manage all of the underlying investment strategies included in the fund.
OtherOther alternative strategies include investment approaches that typically provide investors with exposure to returns that are differentiated from traditional long-only equity or fixed income investments but do not fit into an existing alternative investment category.
Real ReturnReal return strategies typically provide investors with protection against inflation and monetary instability by investing in assets that perform well during periods of inflation. Assets that may be used in these strategies include commodities, infrastructure, real estate, floating rate notes and inflation linked bonds.
Risk ParityRisk parity strategies generally invest across multiple asset classes and focus on the allocation of risk within a portfolio rather than the allocation of assets. By doing so, they aim to provide investors with an improved risk/return tradeoff relative to a traditionally allocated portfolio. To achieve their targeted risk allocations across asset classes, these strategies will often use derivatives to leverage or deleverage positions in the portfolio.
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