Alt Funds Not So Good on Brexit Friday (-.71%)
Alt Funds Not So Good on Brexit Friday (-.71%)
Although AQR's QSPIX was up .70% (Vanguard Total Bond was up .55%) the average alternative fund did poorly on Friday.
A man is rich in proportion to the number of things he can afford to let alone.
Re: Alt Funds Not So Good on Brexit Friday (-.71%)
As a comparison with Vanguard Total Bond, VGIT (Vanguard Intermediate US Treasuries) was up 0.90%. I believe we also saw in 2008 that Treasuries did well during "panic, sky is falling" cases than Total Bond which includes corporates and MBSs.
Re: Alt Funds Not So Good on Brexit Friday (-.71%)
Forgive me if this is basic, but what is an Alternative Fund?
I'm just a fan of the person I got my user name from
Re: Alt Funds Not So Good on Brexit Friday (-.71%)
It, um, is not all that well defined, based on what I see here and elsewhere, so that's actually a pretty good question. It's used to refer to investments that aren't your standard stocks and bonds. It's something of a catch-all category for things so different that in many cases I'd say it's not even useful to analyze them together.Day9 wrote:Forgive me if this is basic, but what is an Alternative Fund?
Some people even consider REITs and TIPs to be alternatives, but that's not what most people mean. Sometimes this might mean other asset classes like commodities (say a commodities futures fund), currencies, private equity, direct real estate, etc. Other times the focus is more on specific strategies, generally those associated in the past with hedge funds.
Morningstar has or at least had the following categories: Bear Market, Multicurrency, Single Currency, Long/Short Equity, Market Neutral, Multialternative, Managed Futures, Volatility, Option Writing, Long/Short Credit, Trading--Leveraged Commodities, Trading--Inverse Commodities, Trading--Leveraged Debt, Trading--Inverse Debt, Trading--Leveraged Equity, Trading--Inverse Equity, Trading--Miscellaneous. They have other categories for commodity funds. And that list is missing strategies like hedge fund replication, event-driven, mergers/acquisitions, and the likes.
For what it's worth, many of the options funds and long/short equity funds probably are net long stocks, and many other funds may effectively have market exposure or something correlated to it, so it's not too shocking for many of these to be down when the stock market is down. If you're investing long in distressed credit I'm imagining that it wasn't a great day either, even if most bonds were up. The ones that are market neutral have no excuse, though, but even then you expect about anything to be down around half the time regardless of what the market does. I guess we can say that the bear market funds really have no excuse to be down.
Re: Alt Funds Not So Good on Brexit Friday (-.71%)
Are there any data on how hedge funds performed during this time (from the last few months onward as Brexit became bigger and bigger news). I suppose it is way to early, but it would still be interesting to see how they negotiated this financial pothole too.
LOSER of the Boglehead Contest 2015 |
lang may yer lum reek
Re: Alt Funds Not So Good on Brexit Friday (-.71%)
From Investopedia:Day9 wrote:Forgive me if this is basic, but what is an Alternative Fund?
Loading
What is an 'Alternative Investment'
An investment that is not one of the three traditional asset types (stocks, bonds and cash). Most alternative investment assets are held by institutional investors or accredited, high-net-worth individuals because of their complex nature, limited regulations and relative lack of liquidity. Alternative investments include hedge funds, managed futures, real estate, commodities and derivatives contracts.
Many alternative investments also have high minimum investments and fee structures compared to mutual funds and ETFs. While they are subject to less regulation, they also have less opportunity to publish verifiable performance data and advertise to potential investors.
Alternative investments are favored mainly because their returns have a low correlation with those of standard asset classes. Because of this, many large institutional funds such as pensions and private endowments have begun to allocate a small portion (typically less than 10%) of their portfolios to alternative investments such as hedge funds.
While the small investor may be shut out of some alternative investment opportunities, real estate and commodities such as precious metals are widely available.
Read more: Alternative Investment Definition | Investopedia http://www.investopedia.com/terms/a/alt ... z4Cmorxh6a
-
- Posts: 3611
- Joined: Wed Dec 30, 2009 8:02 pm
Re: Alt Funds Not So Good on Brexit Friday (-.71%)
There is one alternative asset class that has done very well this year. See if you can guess what it is.
In theory, theory and practice are identical. In practice, they often differ.
- LikeYouImagine
- Posts: 194
- Joined: Sun Sep 20, 2009 11:35 am
Re: Alt Funds Not So Good on Brexit Friday (-.71%)
From the assets I own that could be called alternative, iShare Gold Trust ETF (IAU) was up nearly 4% and AQR Managed Futures High Volatility Fund (QMHIX) was up 8%. AQMIX which is lower volatility was up 5%.
-
- Posts: 16022
- Joined: Thu Feb 22, 2007 7:28 am
- Location: St Louis MO
Re: Alt Funds Not So Good on Brexit Friday (-.71%)
BTW-not only was QSPRX up slightly on very bad day but the other alt fund from AQR that I own, AQMRX was up over 5%. Of course one day doesn't mean much if anything. But it does at least show the low correlation with market returns.
Larry
Larry
Re: Alt Funds Not So Good on Brexit Friday (-.71%)
If I go back 5 years on any of the funds mentioned in this thread, I think the better 'alternative' is more VTI