Types of Liquid Alternatives
Liquid alternative mutual funds employ a wide range of strategies with distinct performance characteristics.
Liquid alternative mutual funds employ a wide range of strategies with distinct performance characteristics.
Alternative Strategies
Liquid alternative strategies come in three major types:
Hedged
Intended Purpose
Capture growth potential while managing risk through the use of short sales to offset market exposure
Examples
Focused Expertise
Intended Purpose
Capitalize on potential mispricing of securities that may arise from specific corporate situations
Examples
Trading
Intended Purpose
Capture opportunities in the commodity, currency and interest rate markets
Examples
Alternative Asset Classes
Real Estate
Intended Purpose
Generate income and capital appreciation through rental or financing income associated with commercial real estate
Examples
Real Estate Investment Trusts (REITs)
Commodities
Intended Purpose
Hedge inflation risks through physical commodities including energy, agriculture or precious metals
Examples
Energy Master Limited Partnerships (MLPs)
Diversification does not assure a profit nor does it protect against loss of principal.
This information is for educational purposes only and is not intended as investment advice.