MainStay Investments offers a slightly different take on liquid alternatives, defining “non-traditional investments” as those investments and strategies that haven’t historically exhibited high correlation to the traditional asset classes of stocks and bonds. Since these investments and strategies aren’t driven by the same factors driving the price movements of stocks or bonds, they offer investors enhanced diversification throughout the ups and downs of the stock and bond markets.
A survey of 800 investors found that 50% invested in non-traditional investments to improve their diversification and to pursue enhanced returns. Whereas private placements, hedge funds, and other investment opportunities for “accredited investors only” used to be the primary means of accessing alternative strategies, MainStay’s survey found that 65% of respondents said they used mutual funds to gain exposure to alternative strategies. Two-thirds of those investing in alternatives said they were pleased with their alternative investments and have increased their allocations.