Liquid Alternatives Enable Access for Individuals to Alternative Investments
Liquid Alts Offer Endowment Style Investing to Individuals.
Liquid alternatives consist of a wide variety of investment options, strategies and portfolio options. Alternative investment prevalence has been growing in recent years among both everyday investors and large financial institutions. This growth in popularity has largely benefitted individual investors in mulitple respects. Alternative investments have historically provided downside protection in poor economic conditions.
Today, alternative investments are continued to be sought after by investors who wish to diversify their portfolios and insure against a turbulent market. Hedge funds are a particularly popular segment of the liquid alternatives market. Hedge funds have been performing well with typical returns between five to 10 percent. This has led to high demand in the hedge fund industry — which has seen a spike in overall assets under management.
But for individuals who lack access to hedge funds, liquid alternatives have been a stong means of achieving similar portfolio diversification benefits.
A Time-Tested Exposure for Investors
Liquid alternatives represent a strong portfolio component to complement traditional investment options. Liquid Alts in Europe have largely been comprised of UCITS strategies, while alternative mutual funds have been the vehicle of choice for much of the U.S. investor base seeking these diversifying exposures.
Given today’s highly volatile market environment, combined with a broad consensus view that volatility and uncertainty is likely to remain the “new normal” in the months ahead, it’s no surprise that market observers are predicting a meaningful rise in Liquid Alts investing, to a degree even greater than that witnessed after the Financial Crisis. Importantly, liquid alternatives also will continue to increase accessibility to Alts for individual investors, enabling them to gain exposures that have been the core of institutional investor success in navigating market cycles over time.
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