For decades, the 60/40 portfolio was the gold standard for balanced investing. However, as correlations between stocks and bonds fluctuate and traditional safe havens face new pressures, advisors are looking toward alternatives to increase portfolio efficiency.
Christian Magoon, founder and CEO of Amplify ETFs, Christopher T. Getter, portfolio manager at Simplify Asset Management, and Thomas Bonville, head of derivative sales at Clear Street, discussed the evolving role of “alts” on a panel at Exchange moderated by Kristin Myers, ETF editor in chief at Asset TV.
Diversifying Alternatives
A central theme was the shift from viewing alternatives as a static bucket to seeing them as active tools for efficiency. Getter noted that while stocks and bonds may decouple over long periods, shorter timeframes often see correlations spike. “That alternatives bucket should really be an ability to diversify your exposures,” Getter said, emphasizing the need for assets that “zig when stocks and bonds zag.”
Demystifying Derivatives and Income
The rise of derivative-based ETFs has brought institutional-level complexity to the retail wrapper. Bonville highlighted that while derivatives can sound intimidating, many strategies are plain vanilla implementations of leverage or option income. Magoon cautioned against “yield traps,” where high payouts come at the expense of eroding Net Asset Value (NAV). “Investors really need an increasing NAV and an attractive yield, not the highest yield with a declining NAV,” Magoon explained.
The Access Revolution: Private Credit and Beyond
The panel also addressed the democratization of private credit through the ETF vehicle. Getter noted that while private credit offers differentiated return profiles, advisors must understand the trade-offs, particularly the stored volatility inherent in less liquid markets. The consensus was clear: The ETF’s daily liquidity is a massive benefit for accessing these typically illiquid spaces. “You aren’t seeing a notice coming from an ETF provider saying you’re locked up,” Magoon noted. That contrasts with recent headlines in the private fund space.
For alternative exposure designed for modern markets, Amplify ETFs offers Amplify Blockchain Technology ETF (BLOK ) and Amplify Junior Silver Miners ETF (SILJ ).
Simplify’s alternative lineup includes the Simplify Private Credit Strategy ETF (PCR) and the Simplify Managed Futures Strategy ETF (CTA ).
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