It pays to remember sometimes that "alternatives" is just another way to say "miscellaneous."

Reuters' Tim McLaughlin wrote a column on alternative strategy mutual funds an their growing popularity with retail investors, citing Fidelity's [profile] partnership with Blackstone to offer the Blackstone Multi-Manager Fund.

The funds are meant to give investors some diversification without all of the risks one would encounter in a pure hedge fund, McLaughlin writes, but not everything is peachy keen with alternative strategy mutual funds.

McLaughlin quotes a Morningstar research note written by Nadia Papiagiannis, saying on alt mutual funds, "There are problems with most of them."

McLaughlin cites Papagiannis' argument that these funds are usually overpriced, have a lot of subadviser overlap, and invest in little-known managers.

McLaughlin doesn't knock these funds entirely, adding that the Arden Alternative Strategies Fund lost 2.6 percent, which is better than the 5.5 percent loss incurred by the S&P 500 Index, rowing the low correlation with stocks can "come in handy."

To read more, click here.  

Edited by: Casey Quinlan


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