"Alternative investments, including hedge fund strategies, are becoming more popular, as many advisors turn to off-the-beaten-path vehicles for everything from portfolio diversification to risk management to generate returns, a study from Cambridge, Mass.-based Cogent Research showed.

To date, nearly 80 percent of all retail advisors interviewed in the survey rely on alternative strategies within client portfolios, allocating on average 11 percent of their book to such strategies. Apart from hedge funds, alternative investment strategies include venture capital, private equity, limited partnerships and structured products and notes.

Of all those making use of alternative investment strategies, more than 40 percent of them will increase their use of ETFs in the next 12 months. Comparative data weren’t available, as this is the first time Cogent addressed the use of alternatives."

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Advisors Turning To Alternative Investments

www.indexuniverse.com

For investors who have IRAs and taxable accounts, they can access to ETFs easily these days. While we certainly do not suggest average investors to venture into venture capital, private equity and other illiquid asset classes, some of hedge fund style ETFs can be useful for asset allocation purpose. Furthermore, our Tactical Asset Allocation(TAA) strategy can be classified as an alternative investment strategy (it depends on whether one would throw anything non-conventional Tactical Asset Allocation(TAA) into the 'alternative' bucket).

We should also point out that many people consider Real Estate Investment Trusts (REITs such as IYR, VNQ), Gold (GLD, IAU), Silver (SLV) or commodities (DBC, GSG) as alternative investments.

Considering recent market and economic environments, these ETFs or strategies are playing an important roles in retirement investing for diversification and risk management purposes. In fact, many of these strategies or portfolios have done a good job to hedge against general stock market (S&P 500 SPX, Nasdaq COMP) downturns.

We have published several research articles on alternative ETFs:

5 Hedge Fund ETFs to Watch

Managed Futures ETFs Are Useful Portfolio Diversifiers

6 Hedge Fund ETFs for Average Investors

Commodity Investing: Long/Short (S&P Commodity Trend Indicators) vs. Long-Only

Or these portfolios:

Permanent Global Portfolio ETF Plan

MyPlanIQ Diversified Core Allocation ETF Plan

Symbols: SPX, COMP, IYR, VNQ, GLD, IAU, SLV, DBC, GSG, Portfolio Strategy & Asset Allocation