Retail alternative-investment funds, practically speaking, are 10 years old. Alternatives have long been in institutional portfolios, but they attracted little attention from retail buyers before the 2008 financial crash. After the disaster, however, the people craved protection, and the fund companies responded. Launching a spate of alternatives funds, they marketed the strategies hard, gathering much of the mutual fund industry’s headlines. Hundreds of alternatives funds were launched over the next several years. Exchange-traded funds followed suit, with offerings that ranged from staid to highly speculative.
The timing was poor. With one notable exception (more on that later), equities have since pounded all rivals. For stock-heavy investors, alternative investments have come in two flavors: 1) thoroughly useless and 2) mostly useless.