Alts Democratized. Rabe Jessica Lynn

Jessica Lynn Rabe

      Alts Democratized

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Alts DemocratizedA Practical Guide to Alternative Mutual Funds and ETFs for Financial AdvisorsJESSICA LYNN RABEROBERT J. MARTORANA, CFA

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      Copyright © 2015 by Jessica Lynn Rabe and Robert J. Martorana. All rights reserved.

      Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

      Published simultaneously in Canada.

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      Portions of the mutual fund information contained in this book were supplied by Lipper, a Thomson Reuters Company (“Lipper”), subject to the following: ©Thomson Reuters 2014. All rights reserved. 1003033/2-14. Information supplied by Lipper and included in this book does not constitute and is not intended to constitute investment advice or an offer to sell or the solicitation of an offer to buy any security of any entity in any jurisdiction. As a result, readers should not make an investment decision on the basis of this information. Lipper's only relationship to the author and publisher of this book is the licensing of certain trademarks and trade names of Lipper and of the data supplied by Lipper without regard to this book.

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       Library of Congress Cataloging-in-Publication Data in on file.

      ISBN 978-1-118-97101-7 (Hardcover)

      ISBN 978-1-118-97103-1 (ePDF)

      ISBN 978-1-118-97102-4 (ePub)

      To my dad, David M. Rabe, for always supporting me in taking strategic risks and pursuing unconventional paths

Jessica Lynn Rabe

      To the glory of God and to Abraham Samuel, founder of the Sharon Children's Home in Andhra Pradesh, India

Robert J. Martorana, CFA

      Foreword

      So you've taken the plunge to learn more about alternative funds, or alts. No doubt you feel compelled in some way to find out more about these fascinating and oft-talked-about investments, and you're ready to jump in and start – or maybe not. Maybe you just want a better understanding of the unknown before you find one popping up or, worse yet, blowing up in your portfolio. Let's take a quick look at the potential reasons why you bought this book and now find yourself reading this Foreword:

      ● You are an avid self-directed investor who wants to know about the latest product innovations.

      ● You are a well-read advisor seeking to broaden the palette of investment vehicles you use to build your clients' portfolios.

      ● You employ the services of an advisor and/or you invest in a fund that utilizes multiple asset classes in its investment solutions, and you recently learned that liquid alts were to be part of the mix.

      ● You keep hearing about these so-called alts on financial media, at cocktail parties, or on the sidelines at your children's soccer games, and want some meaningful fun facts to add to the conversation.

      ● You're a student, and this is on the syllabus.

      All these or any combinations thereof are excellent reasons to read this book. Why am I writing the Foreword, you ask? I will tell you, of course, and I think you'll find my rationale strikes a similar theme across many of the aforementioned scenarios. Like many of you, I lived through the financial crisis of 2008. I also lived through the tech bubble meltdown of 2001 and every other market downdraft dating back to 1987. That doesn't make me either a dinosaur or a neophyte, but it does make me aware of the fact that dynamics in the market have changed over time and the tools used by investors to weather such storms have had varying degrees of success and seemingly less efficacy with each new episode. Time-tested adages such as building diversified portfolios with underlying holdings that zig while others zag have fallen short. And it's not just that market dynamics seem to have evolved over the years; it's also the degree of urgency placed on those in the position of building portfolios to get it right and limit losses.

      If you, too, have personally lived through all the market events mentioned – and particularly if you've lived through a few more even further back in time – you are probably not in a position to suffer the impacts of another market meltdown. You're simply too vulnerable at this stage of your savings and investing horizon to sit tight and let the corrections right themselves. You are also likely to be in need of generating income and at least keeping pace with inflation, if not rising health care costs. Stuffing mattresses and rolling over certificates of deposit (CDs) aren't very