New research road tests alternatives

Christian J. Galipeau and Brendan T. Murray, Senior Investment Directors; Seamus S. Young, CFA, Investment Director, 10/30/15

Alternative investment strategies have been embraced by a range of investors over the past decade, largely on the basis of their ability to target specific needs to diversify portfolios.

Putnam now offers a new research study with insights that can help set performance expectations for alternative strategies under actual market conditions.

Taking a methodical approach, the study classifies alternative strategies into four key investment objectives —

Return Enhancers, Inflation Hedges, Volatility Dampeners/Risk Reducers, and Zero Beta/Zero Correlation objectives.

Each objective is then analyzed in real economic scenarios of the past 20 years to highlight its strengths and weaknesses during four different periods of growth and inflation. The approach yields insights for both returns and risk-adjusted returns.

The conclusion offers observations for portfolio strategies and indicates the objective with the best long-term risk-adjusted performance.

Financial professionals: Read Putnam's new research, Alternatives in Action, for the full analysis of alternatives in real market conditions of the past 20 years.