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Liquid Alternatives: Coming To a Retirement Plan Near You

One of the biggest tenants of modern portfolio theory (MPT), long-term investing and building a retirement portfolio is asset allocation. The basic gist is that investors are able to cobble together a portfolio of different asset classes in order to drive better long-term returns. Stocks, bonds, real estate, precious metals, etc., all move in different directions and magnitude. This lack of correlation provides strong returns in both up-, down- and sideways-moving markets.

Or at least that’s the theory.

In recent years – and with the Great Recession and Coronavirus Pandemic – correlations for many of the major asset classes have been similar. This has prompted many investors to look for various alternatives and other strategies to get the needed non-correlation.

With recent legislation and new rules from the U.S. Department of Labor, liquid alts could be coming to a retirement plan near you. The question is do you need them?

Be sure to check out the Retirement Channel to learn more about retirement planning concepts and strategies.

Liquid Alts: The Real Basics

Alt strategy correlation matrix

Getting Into Your Retirement Plan

Do You Need Them?

The Bottom Line