It is nice to have alternatives, especially in periods of market volatility, when equity and fixed income returns are under strain. Inflation, central bank rate hikes, geopolitical conflict and concern about the pace of economic growth have forced many investors to review their financial goals. In these times, it can make sense to look beyond long-only stock and bond funds. Alternative investment strategies can supplement traditional stock, bond, and cash allocations. Alternative investments can include hedge funds, private capital, natural resources, and real estate.
Many of these types of investments aim to generate positive returns regardless of the market backdrop. Alternatives also tend to have a low correlation to major asset classes. In this way, they can be used to diversify portfolio returns and to help investors to achieve their long-term goals.
At Jupiter Asset Management, we have a range of actively managed alternative investment strategies that aim to offer uncorrelated returns. Three funds that we highlight here are: Jupiter Merian Global Equity Absolute Return Fund (GEAR), Jupiter Gold & Silver Fund and Jupiter Strategic Absolute Return Bond Fund (SARB).
Jupiter Strategic Absolute Return Bond Fund (SARB)
SARB aims to generate returns in all market conditions by investing across the liquid fixed income and currency universe. The team is also able to take short positions, which generate profit when the value of an asset declines. This can potentially add meaningfully to performance, particularly in rising rate environments, when long-only bond strategies may struggle. The fund’s benchmark is the US Fed Funds Effective Overnight Rate, and the fund targets average volatility in its portfolio construction.
Jupiter Merian Global Equity Absolute Return Fund (GEAR)
GEAR is a global market-neutral equities strategy designed to generate returns even in challenging environments. It is “macro agnostic”, meaning the fund managers do not attempt to predict macroeconomic outcomes. The GEAR investment process is data-led, using a diversified set of stock selection criteria. The fund systematically analyses thousands of stocks daily as it seeks to find the best portfolio for the current environment.
Jupiter Gold & Silver Fund
Gold & Silver blends allocations to gold and silver (via holdings in listed gold and silver funds) with shares of mining companies. Precious metals are liability-free currencies that can be a safe harbour in periods of interest rate or financial market volatility. In times of high inflation, holding some gold may help to mitigate the effects of rising prices on an investment portfolio. Investors often overlook the potential benefits of monetary metals like gold and silver.