During my former days as a financial advisor, I'd occasionally get a call or email from someone in our "Alternative Investments" department trying to drum up business. Invariably, they wanted me to deposit my clients' assets into a specialized utilizing one esoteric strategy or another. Quite often the objectives (and returns) being pitched would pique my interest.
Unfortunately, that eliminated the majority of my client base, and most of the general investing public for that matter.
That's why the good folks atIQ have pioneered a way to "democratize" and open the club to everyday investors like you and me.
Mystique aside, fund blows up in spectacular fashion and rattles the market for a few days, but many manage to generate superior risk-adjusted returns and capture the alpha that eludes most traditional portfolio managers.managers don't have secret, can't-miss trading systems -- they are fallible like everyone else. From time to time, an overleveraged
Wealthy investors have taken notice.
The number of volume. The pros in charge of pensions, college endowments and portfolios of the rich and famous now allocate as much as 25% to alternative investments, up from just 3% a few years ago.has swelled from 600 to 9,000 during the past two decades. Meanwhile, industry assets have surged more than 30-fold to $1.4 trillion. That accounts for almost one-third of the market's daily trading
In any case, the goal is to seek out and exploit inefficient prices. To make the most of these opportunities, mutual fund managers. They can use leverage or short sales, pile into cash, overweight certain stocks or sectors, use derivatives, foreign currencies and other instruments as they see fit.managers aren't handcuffed by the same restraints as
Unfortunately, these funds can be illiquid and cause headaches at tax time. And management fees are outlandish -- highly skilled managers usually take 2% to start and then skim off as much as 20% of any profits each year.
Launched a few months ago, this innovative ETF is a synthetic . The index it tracks is unlike any other you'll find -- governed by a set of quantitative rules and algorithms set down by a hand-picked team of brainiacs. Chief Investment Strategist Robert Whitelaw has a mathematics degree from and a Ph.D. in finance from Stanford.
As I've said, commodity prices, inflation, employment, interest rates and other big-picture global factors are carefully evaluated. The conclusions reached will determine where the portfolio goes -- it could be skewed to foreign government bonds one day, real estate the next.come in several different flavors. This one is macro-driven, meaning geopolitics,
At the moment, the portfolio is short small-cap Russell 2000 futures and long emerging markets stocks, short-term bonds, commodities and foreign currencies. But rather than hold individual securities, exposure to any given asset class is done through other ETFs.
For example, the largest holding is iShares MSCI Emerging Markets (NYSE: EEM), which in turn owns Petroleo Brasileiro (NYSE: PBR), Taiwan Semiconductor (NYSE: TSM) and dozens of other emerging market stocks. This fund-of-funds concept adds another layer of diversification and protection.
Because MCRO has only been trading a few months, the jury's still out on whether it can successfully duplicate benchmark by more than 300 basis points during the past five years, with less volatility.performance over the long-haul. But back-tested data shows the IQ Composite annually outrunning its Credit Suisse/Tremont
Action to Take --> The fund isn't cheap.IQ charges 0.75% for its services each year -- in addition to fees for underlying portfolio holdings like EEM. But that's a tiny fraction of what you'd pay for a true . And if MCRO's managers can successfully read the macro tea leaves and double-down in just the right spots, it could be well worth the cost.
- Create a retirement savings goal
- Design an investment plan to reach it.
- Get a professional money manager to continually monitor and rebalance your portfolio
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