Still, the average 401(k) plan participant does not have access to these kinds of strategies because employers will not offer them.
Jim Phillips, president of Retirement Resources, a Peabody, Massachusetts-based firm that advises 401(k) plans with $50 million to $100 million in assets, said employers don't want to offer hedge fund strategies to their workers as stand-alone investments. The fear is that employees would put all of their retirement savings into those strategies.
He said he welcomes the addition of hedge fund strategies as a piece of target-date fund portfolios.
"It is really the only sensible way to give these investors exposure to alternative investing," Phillips said.
More target date funds may add these investments once the current bull market comes to a close.
New York-based Voya is holding off because there is no rush given the strong equities market, said Paul Zemsky, CIO of multi-asset strategies. The average alternative mutual fund has returned 2.3 percent over the past year, compared to the average equity fund, which has returned 10.55 percent, according to Morningstar
"You are really putting a lot of faith in the skill of the portfolio manager when you choose these funds," Zemsky said.