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Reduce Risk in Market Downturns with Exposure to Alternative Assets

Investing in hedge-fund-like strategies may help to reduce risk during market downturns. Alternative asset managers also provide additional diversification and expertise.

Clients who experience market downturns often feel that they have limited access to investment options.  They feel more vulnerable and, by the same logic, so do financial professionals.  A lack of alternative assets being approved for sale by compliance, a lack of training on the part of advisors, and a lack of investor education hinders the understanding and usage of alternative assets by both investors and professionals alike.

Exposure to alternative assets helps to diversify exposure away from traditional equity and fixed income assets. Alternatives may also generate returns when financial markets are volatile or even in a decline.  Alternative investments can also provide hedging strategies typically not available through and investor’s 401k plan.

Alternative investment managers tend to have specialized knowledge in a specific area that goes beyond what is generally available to financial professionals. In addition, managers of alternative investments will often invest their own assets in the instrument to show investors and professionals that they are condient in their strategy.  

Did You Know...

4Thought provides financial professionals with options for alternative investment exposure through separately managed accounts either stand-alone or as part of a broader portfolio allocation? This allows financial professionals to provide their clients with low-cost, transparent access to non-traditional investment strategies designed to enhance returns and reduce risk in volatile markets, and even in market downturns.

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