"Since 2008, the best advisors and asset managers have looked to give people alternatives they can play in the marketplace without being at the mercy of the S&P 500," Rosenbluth says. "They are looking at other asset classes and part of the benefit is that some of these alternatives are relatively cheap and transparent."
As for the size of alternative allocations to client portfolios, Papagiannis and Patti agree at least 10% to 30% is desirable but that 10% is probably too low. "At least 20% is necessary to provide any edge, and some say you should have as much in alternatives as you have in equities, depending on the strategy," Patti says.
--Karen DeMasters