(Bloomberg News) The decade-long slump in equity prices boosted interest in alternative assets, giving a "faddish element" to these investments, according to OppenheimerFunds Inc.'s Arthur Steinmetz.

Nonetheless, investors should continue to hold alternative assets even as volatility declines and stock prices rebound, Steinmetz, chief investment officer at OppenheimerFunds, said last week at a portfolio managers' conference organized by Bloomberg Link in New York.

"What we all know is for the last decade, stocks have stunk and that has meant there's been increasing focus on anything that doesn't go down the way stocks go down," Steinmetz said. "That gives rise to a bit of a faddish element around searching for non-stock-like assets. Alternatives have always been a good idea. We used to call it diversification."

Investors have turned to so-called alternative assets in search of protection and higher returns in a volatile market with increased correlations. Alternative investments, which can range from derivatives to real estate holdings, have rivaled traditional funds, spurring withdrawals of about $470 billion from U.S. equity mutual funds over the last five years.

"Having a decade where stocks stink is somewhat anomalous," Steinmetz said. "I question whether or not the current fad for alternatives will be quite so durable if we have few years of great stock market returns."

Steinmetz said loans are one of his current favorite asset classes because of company balance sheets that are in better shape than usual at this point in the economic recovery and liquidity provided by the Federal Reserve.