Liquid alternatives back in the spotlight after year of solid performance

These portfolios are designed to diversify a portfolio, primarily acting as a line of defence, by producing returns that are uncorrelated to those of stocks and bonds. These funds employ a wide range of sometimes complex tactics to achieve this. Having been out of favour for several years due to their inability to outperform broad indices tracking the equity and fixed income markets, liquid alternatives proved their value proposition last year, said Francesco Paganelli, manager research analyst at Morningstar. "Some of the largest players have not delivered on their promises throughou...