Liquid Alternatives Explained

By: AGF Investments • September 13, 2019
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Why Would Investors Consider Alternatives?

Investors use alternative strategies for a variety of reasons depending on their investment objectives. Because alternatives tend to behave differently than typical equity and fixed income investments, adding them to a portfolio comprised of traditional asset classes may provide investors with several potential benefits:

Diversification through low to non-correlated return sources

Alternatives are considered to be long-term diversifiers within a portfolio because they tend to have low correlation to traditional asset classes like publicly listed equities and fixed income.

Reduced volatility and risk
A portfolio containing a variety of alternatives may offer reduced risk and volatility without a proportionate reduction in expected return.
Downside protection and capital preservation
Employing alternatives within a portfolio may help to shield investors from a decline in value when markets are stressed.
Greater risk-adjusted returns
Alternatives have been shown to offer opportunities to enhance the risk-adjusted returns of well-diversified portfolios.
Hedging against rising interest rates or inflation
Alternatives can provide a hedge against inflation or rising interest rates due to their uncorrelated risk and return profiles relative to these economic variables.

Commentaries contained herein are provided as a general source of information based on information available as of September 5, 2019 and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and the manager accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Investors are expected to obtain professional investment advice.

AGFiQ is a collaboration of investment professionals from Highstreet Asset Management Inc. (a Canadian registered portfolio manager) and AGF Investments LLC (formerly FFCM, LLC). This collaboration makes-up the quantitative investment team.

AGF Management Limited (“AGF”), a Canadian reporting issuer, is an independent firm composed of wholly owned globally diverse asset management firms. AGF’s investment management subsidiaries include AGF Investments Inc. (“AGFI”), AGF Investments America Inc. (“AGFA”), Highstreet Asset Management Inc. (“Highstreet”), AGF Investments LLC (formerly FFCM LLC) (“AGFUS”), AGF International Advisors Company Limited (“AGFIA”), AGF Asset Management (Asia) Limited (“AGF AM Asia”), Doherty & Associates Ltd. (“Doherty”) and Cypress Capital Management Ltd. (“CCM”). AGFI, Highstreet, Doherty and Cypress are registered as portfolio managers across various Canadian securities commissions, in addition to other Canadian registrations. AGFA and AGFUS are U.S. registered investment advisers. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. AGF AM Asia is registered as a portfolio manager in Singapore. AGF investment management subsidiaries manage a variety of mandates composed of equity, fixed income and balanced assets.

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