Video: Rick Lake Suggests 10-25% in Liquid Alternative Strategies

“Liquidity strategies represent the democratization of hedge funds,” according to Rick Lake, co-chairman and treasurer at Lake Partners. Mr. Lake breaks down the meaning of “liquid alternatives” in this video, first explaining liquidity and then the “alternative” component – which includes both alternative strategies and alternative assets. “Alternative assets represent things that are not stocks, bonds, or cash; like commodities and currencies.”

When asked if it was “too late” or “too risky” to get into liquid alternatives at this stage in the investment cycle, with the S&P 500 hitting fresh new all-time highs with regularity, Mr. Lake responds by reminding the interviewer that equities are risky: They’ve had “lots of volatility, lots of drawdown – and both of those phenomena will return.” This is why Mr. Lake recommends allocating between 10-25% to alternatives, which have volatility dampening properties that can greatly limit account drawdowns.

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