Fuse Blog

Alternatives Fulfill Promise of Mitigating Market Risk

  • After years of strong market returns, 2022 has been challenging period for investors across both the equity and fixed-income markets; however, Alternative funds as a group have tempered the losses for investors with exposure to the asset class.
  • Based on Morningstar’s broad categories, active open-end funds and ETFs in the Alternative category have lost just less than 7% of assets while U.S. Equity and Taxable Bond funds have lost roughly 27% and 13% of their assets, respectively.
  • Additionally, while active U.S. Equity and Taxable Bond funds have been in heavy net redemptions, Alternative funds have posted positive monthly flows through 2022 with investors seeming to realize risk has returned to investment decision making.

2022 Market Impact on Select Category Assets

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Source: Morningstar Data; Active OE/ETF funds with net flow impact removed