What are liquid alternatives?

Liquid alternative investments (or liquid alts) are mutual funds or exchange-traded funds (ETFs) that aim to provide investors with diversification and downside protection through exposure to alternative investment strategies.

Are liquid alternative funds better than hedge funds?

Liquid alternative, or liquid alts, are alternative investment vehicles that aim to be more accessible to retail investors. While they follow many of the same market strategies, liquid alts are far more liquid than hedge funds - meaning that investors can readily buy and sell shares in the fund. Liquid alts also have lower investment minimums.

What are the bottom line liquidity alternatives?

The Bottom Line Liquid alternatives combine the daily liquidity of mutual funds with the high-performing strategies of hedge funds. They do so without the large income, net worth and minimum investment requirements of most hedge funds, putting them on the radar of many retail investors.

Should you invest in a liquid Alt?

Before an investor considers adding a liquid alt to their portfolio, there are a couple things to keep in mind. The first is that liquid alts tend to have higher fees than average mutual funds. Though these alternate investment vehicles offer similar liquidity to your everyday mutual fund, they tend to have higher feesthan those mutual funds.