Liquid alternatives may not be what they seem

Alternative to alts?

One of the cornerstones of asset allocation strategy is to mix asset classes that work in divergent harmony.

But what happens when traditional asset classes are disappointing at the same time - like this year when stocks and bonds have fallen together? In the face of such broad equity and fixed income market downturns, some investors may be tempted by so-called alternative assets. These investments may include liquid alternatives, or "liquid alts," a subset of fund and ETF investments that offer easier-to-access exposure to alternative strategies which may claim to offer higher potential returns and lower correlations to stocks and bonds. But those twin claims of higher return and a smoot...