Alternative mutual fund strategies are the fastest-growing segment in the industry as investors look for different ways to get equity-type returns while trying to minimize risk in the current volatile macro environment, says Michael R. West, Senior Partner and Chief Executive Officer of BPV Capital Management.
“At the end of the day, the average investor was relatively flat to down for the last decade. That’s an expensive decade. Many people rode it up and rode it down, and some people were lucky in timing it,” he said. “What we would argue is there has to be a more thoughtful way, which is you can get those equity-type returns without taking that level of risk.”
West says he is not excited right now about opportunities in Europe, however, the domestic equity market is showing some signs of improvement, so he has a meaningful position in the domestic equity market. He advises investors to think about investing differently than in the past, and focus less on trends, and more on how to get a return and hedge against the downside.
“If you have a strategy that’s appropriately allocated in the right buckets, and you have enough buckets and those buckets don’t all act the same way at the same time, you may not have massive equity returns when the market’s going straight up, but you are likely to mitigate your downside risk,” West said.
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