How Advisors Can Prepare for Turbulent Times by Learning About and Allocating to Liquid Alternatives

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How did your portfolio perform in 2022, when stocks and bonds were negative? If you took the traditional 60/40 approach, odds are it didn’t perform too well. But if you had even a slight allocation to alternatives such as managed futures, or what we call a “balanced risk” approach, odds are you could have outperformed the market (see below for historical data).

Data Source: Bloomberg LP and Catalyst Capital Advisors LLC. Based on monthly return data from 12/31/1999 to 12/31/2024. Stocks are represented by the S&P 500 TR Index; bonds are represented by the Bloomberg US Aggregate Bond Index; Balanced Risk Strategy is represented by 100% notional exposure to SG CTA Trend Index, 50% allocation to the S&P 500 and a 50% allocation to the Bloomberg US Short Treasury TR Index (to represent collateral for futures program). Rebalanced monthly. Past performance does not guarantee future results. See important disclosures at the end of this presentation, including with respect to the limitations inherent to hypothetical performance comparisons.

In order to help advisors understand this (we believe) under-allocated space and prepare for volatility, the team at Catalyst Funds and Rational Funds recently published The Guide to Building a Risk Balanced Portfolio for Volatile Markets.

In this research paper, we:

• Share insights from alternatives investment teams
• Explain how an allocation to managed futures could help in turbulent times using data-driven arguments
• Most importantly, explain the asset class and investment approach in simple terms.

We hope you’ll read this report and walk away with a better understanding of how allocating to more than just stocks and bonds can offer your clients the only free lunch in the investment world: diversification.

Click here to read the full report.