Worried about the stock and bond markets? Are alternative investments the solution? Alternatives, such as hedge funds now come in a liquid mutual fund form so they can be bought and sold daily on an exchange. They are regulated and transparent, so you know what they own – and the fees are considerably less than hedge funds. Most are available to average individual investors. These Liquid Alternative funds have taken off – their assets have increased ten fold since 2005. Lipper’s Robert Jenkins and Altegris Advisors’ Lara Magnusen discuss the risks and rewards of alternative investments.
Be Very Careful When Considering Alternative Investments
- Many new and inexperienced players
- Many strategies are untested in different market cycles
- High fees compared to traditional mutual funds
- Experience counts
- Go with managements with proven track records over many years and market cycles
Jenkins: Investment Dependability
- Have a foundation of traditional income producing investments
- Own absolute return alternative investments
Magnusen: Core Allocation
- Recommends 35% in core absolute return strategy
Jenkins: Developing Income Funds
Robert Jenkins, Head of Global Research at Lipper doesn’t just track existing mutual funds he is also on the lookout for ones that are being developed. He says there are some interesting income-oriented products in Japan that could be heading our way.
Magnusen: Investment Alternatives
Lara Magnusen is so committed to alternative investments that she became a Chartered Alternative Investment Analyst, or CAIA and has been Director of Research and now Director of Investment Products at alternative investment specialist, Altegris Advisors. She explains why she decided to focus on alternatives in the first place.