New attitude to low volatility

Investors are now better prepared to appreciate the advantages of a portfolio that mixes in alternative strategies such as hedge funds.
Three years of falling equity prices and the bounce during 2003 have dramatically strengthened the case for the inclusion of alternative investments within a traditional portfolio.
“If it’s not broken, don’t fix it.” This might describe the approach taken by traditional portfolio managers in the booming equity markets of the 1990s. But the markets did break, suffering substantial losses in the first three years of the new millennium. This period of sustained red ink caused many investors – institutional and retail – to reconsider their strategies and even to view, with some suspicion, the highly volatile recovery of 2003 when, for example, the S&P 500 Index gained 26.38 per cent.