He said more advisors should consider alternatives, particularly liquid alternatives, because they have performed better than fixed income with some having positive returns in this down market.
“They clearly played a serious, positive role within the quarter for those who were using them within their assets,” said Sabourin.
“So, that was a great test for the odds, but you have to choose which one fits best with your investment philosophy or your investment goals. That’s what I mean by the bicycle analogy. Adding alternatives to a bond and equity portfolio really helps to reduce the volatility within your portfolio and keep a decent return overall.”
Sabourin noted that alternatives help to protect in the downside, even in a choppy market, which will be important in this third quarter, particularly since they’ve had a good start since last Friday.
“If you use them properly within your asset mix, it makes a lot of sense,” he added, “because it reduces volatility and helps your portfolio do a better job, performance-wise. And that’s the name of the game. It’s a little bit more work, for sure, for the advisor and for portfolio managers like us. But, in the end, the client deserves it.”
