Some advisors question the need for alternative fixed income strategies now that yields on plain vanilla bonds are more generous than they’ve been in years
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“Liquid alts solve for the fact that, in a short period of time, there can be extreme changes in market interest rates,” Mr. Cooper says. “A traditional bond portfolio simply can’t eliminate the price risk that comes with changes in interest rates. Even very high-quality fixed income baskets can still see big reactions.”
Manulife Alternative Opportunities Fund is more focused on income generation and managing volatility, Mr. Headland says. Focused on North America, the fund uses credit default swaps and options strategies as it aims to provide higher yields with less volatility than a typical bond fund. She says the investment strategies are too “opaque” to consider an alts product as a core fixed income investment.
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