Johann Lee in FundFire: The Potential Future of Liquid Alts Inflows

In today’s consistently volatile environment, proper diversification is so much more than just stocks and bonds. Here at AlphaCore Wealth Advisory, we believe incorporating liquid alternatives into the asset allocation mix can help investors build the well-diversified portfolios they need to shield their wealth against market downturns.

Many investors agree with our thinking too, with liquid alts ETFs receiving more than $17.3 billion in inflows this year through May, according to Morningstar data. But will this momentum continue? FundFire spoke with AlphaCore Wealth Advisory Director of Research Johann Lee, CFA, for insight.

According to Lee, there is certainly space for more growth in liquid alts. “I can definitely see a heightened cycle of flows beyond just this year,” he explains. “I think the last few weeks have been a wake-up call for a lot of investors.”

However, some investors may not be as optimistic about liquid alts. For example, after 2008, many retail investors rushed into the space only to feel underwhelmed with “muted” performance in a bull market and “failed to own fire insurance before the fire,” Lee tells the publication.

To avoid the same outcome this time around, Lee says it is important to do deep dives on funds by assessing manager risks and fees when allocating to liquid alts. “Bigger is not necessarily better. You should look at the entire landscape, put your head down and do the homework,” he explains.

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