Alternatives can be helpful, especially as noted earlier, with the introduction of lower cost ETFs and mutual funds. Strategies, as mentioned above, managed futures, equity market neutral, etc., can provide uncorrelated returns and can be positive in negative markets. I made money using them in 2022, or more accurately lost less than I would of without them in my portfolio(they were about 15% of my total holdings.) The problem is that no one can predict when the market down turns will hit and if these strategies will respond the same as they did last downturn. The pandemic was such a massive event that I, and anyone paying attention, knew the massive spending was going to cause inflation and such was able to use some of these strategies to buffer overall losses in bond and stock holdings. That was the one time in my life I felt any confidence in making a market call and I am pretty confident and hopeful it will be the last. I still hold some of these strategies but to size these to the point they would have a real effect on your portfolio in the next downturn(for the sake of argument let’s just say they act like they did in 2022), would result in a drag on your portfolio in the good time and raise costs. I could see someone with vast wealth using these strategies to “stay wealthy” as opposed to someone who is in the wealth building phase of their life. For the overwhelming majority of investors these strategies are unnecessary and overly complicated. You really need to do your research if you choose to use them. Many times they seem to be marketing ploys to dazzle the uninformed and squeeze more fees out of people. There are some good managers trying to bring these products to small investors but due diligence is the key. In all honesty it might just be more of a pain in the ass than it is worth. I keep about 10% in these funds but it is just my “fun money” (others might hold crypto or single stocks in this bucket) and keeps me entertained. I haven’t lost money but my returns in that 10% would not impress anyone on this forum.
Statistics: Posted by Kinkelly — Fri Nov 01, 2024 2:50 am — Replies 34 — Views 1698