The tailwinds for traditional assets have created headwinds for asset managers and advisors who specialize in alternative investments, but better days may be ahead.

At the 8th Annual Inside Alternatives conference in Denver last week, presenters and panelists discussed the challenges that a bull market places on the marketing and implementation of alternative strategies.

“There’s a lot of complacency out there,” said Cleo Chang, senior vice president and head of alternatives for American Century, at a panel on alternative income products on October 23.

A recent analysis by Natixis Global Asset Management found that advisors had reduced their allocations to alternatives from an average of 7.5 percent to an average of 5.5 percent between June 30, 2016, and June 30, 2017.

Even as conference panelists lamented the difficulty in explaining the benefits of alternatives, which can offer investors non-correlated streams of returns that can diversify their portfolios, U.S. stock indexes notched new record highs. The surge in equities has been particularly difficult for managed futures and multi-alternative managers whose products tend to underperform during rising markets, but outperform during sinking markets.

“It’s been an awful, terrible period for our asset class, which is flat and boring,” said Dr. Rufus Rankin, director of research of Equinox Institutional Asset Management, at a  discussion on managed futures. “Yet while we’ve been boring and frustrated, we’ve also been preserving capital and providing a return stream independent  from anything else your clients are invested in.”

Many of the presenters blamed monetary policy for the woes of alternative strategies, arguing that central bank intervention has muted volatility and artificially inflated asset prices.

“The Fed went into a process of quantitative easing and became the single greatest issuer of mortgages,” said former hedge fund executive and ex-White House communications director Anthony Scaramucci during his keynote address. “All of this has an artificial effect on the markets … we’re now entering the ninth year of the bull market, and it doesn’t seem to be abating any time soon.”

Other presenters said that global growth is slowing to a halt. In her keynote speech, Zambian-born economist and Mildstorm founder Dambisa Moyo said that most economic forecasts predict lower levels of GDP growth, driven by demographic, political and financial factors.

“In the World Economic Outlook that the International Monetary Fund puts forward, they’ve explained that we will never again see the levels of economic growth that we’ve seen for the past 50 years,” said Moyo. “More generally, developed markets are struggling at creating growth without relying on low interest rates.”

Moyo said that investors still might find opportunities in staples like food, healthcare and logisitics.

During an alternatives ETFs panel, Mario Manfredi, client portfolio manager on First Trust’s alternatives team, said the era of accommodative monetary policy was over, and that the bull market would soon lose steam.

“The next eight years don’t look anything like the previous eight,” said Manfredi. “Higher valuations, stretched rates and higher volatility with longer sustained drawdowns, I think we’ll get to the point where buy the dip doesn’t work anymore.”

Concurrently with Inside Alternatives sessions, Financial Advisor magazine’s 6th Annual Impact/SRI ESG Investing conference took place, featuring a debate over where intentional investing works in portfolios and its prospects for creating financial returns and ESG impacts.

For Robert Smith, president and chief investment officer of Sage Advisory, ESG investing has become a screen to find higher quality fixed income opportunities and wring enhanced returns from corporate bonds.

“It’s an elevation of our game,” said Smith. “We’re not constrained in any way, shape or form. We want to be informed and engaged, we want to be enlightened investors, and we believe ESG analysis does this.”

At a later Impact/SRI & ESG conference panel, Abhilash Mudaliar, research director for the Global Impact Investing Network, predicted that advisors and asset managers would soon have their compensation linked to their ability to create impacts.

A general session panel featured a debate between a bearish Ali Motamed, managing partner at Invenomic Capital Management, and a more bullish Jim Paulsen, chief investment strategist at the Leuthold Group.

Motamed argued that the next market correction is imminent, as equities have become vastly overvalued, even in the small-cap stock space, and that between low interest rates and their bloated balance sheets, central banks have little ammunition to counter the next recession.

“The media has taken traditional methodologies and used them to make assumptions about the market, that the VIX is too low, but valuations are too high, and I get all that,” said Paulsen. “I see all those old rules and maybe they’re right, but a better way of looking at it is that this has been an awfully unique period and the incredible, persistent bull persists even to this day.”

Paulsen noted that there hasn’t been a single sector consistently leading or trailing the rest of the market during the recent run and there's been little cyclicality between sub-sectors, which may be a sign that the bull has legs.

At a panel about tail risk, Stephen Cucchiaro, president and chief investment officer at 3Edge Asset Management, said that the end of quantitative easing, a military conflict, or a rapid change in inflation might touch off the next financial crisis.

While alternatives offer some protection, advisors need to be careful, warned Jeanie Wyatt, chief executive of South Texas Money Management, in a panel about using the products in client portfolios.

You don’t have the luxury of making a mistake because most alternatives are long-term investments and may be hard to get out of. “They require a high level of due diligence,” she said.

Financial Advisor editors Evan Simonoff and Dan Jamieson contributed to this report.