Alon Ozer Discusses Liquid-Alternative Funds with Barron’s

Liquid-alternative funds, also known as liquid alts, are mutual funds or exchange-traded funds (ETFs) that mirror hedge fund investment strategies and provide a way to generate returns during extremely low interest rates and market uncertainty.

Despite their alleged ability and purpose to protect portfolios during a financial crisis, liquid alts have struggled with losses throughout the coronavirus pandemic – a circumstance in which they were intended to shine. According to Barron’s, the longer-term performance is even worse. For the three- and five-year periods, the average liquid-alt fund returned 0.6% and 0.7% a year, respectively. By contrast, the S&P 500 climbed 7.9% and 8.6%.

However, this has not deterred investors, and demand for these funds continues to rise due to their low prices and lack of lockups typically seen with hedge funds.

Despite their reputation for underperformance, liquid alts can deliver returns and diversification; it just comes down to carefully selecting the right funds and understanding how they are meant to work in a downturn.

Barron’s recently spoke with Omnia Family Wealth Chief Investment Officer Alon Ozer for more insight on the case for (or against) liquid alts in a portfolio.

“Most alts don’t really work; the last drop of the market was proof,” Ozer explains. “If you don’t perform in this case, why do I need you?”

To read the entire Barron’s article featuring Omnia’s Alon Ozer, click here.