Video: Making Sense of Liquid Alternative Strategies

In this video, Federated Investors’ Portfolio Manager Dana Meissner provides his opinions on liquid alternative strategies. Mr. Meissner echoes the sentiments that liquid alts can be a valuable tool to reduce volatility in an investment portfolio, which can help investors stick with their strategy and achieve their long-term goals. When choosing liquid alts for a portfolio, Mr. Meissner cautions investors to look at the fund’s strategy. To be a true alternative strategy, it must employ short positions or exposures to asset classes other than stocks and bonds.

Mr. Meissner also suggests that investors look at the strategy’s longevity and evaluate the risk/reward over a significant period of time. The greater the track record, the better, especially considering the fact that many alternative strategies weren’t in place before the big market downturn of 2008. Also, in the case of a “fund of funds” strategy, examining the individual products within the fund is key.

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