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Direxion Head of Alternative Investments Ed Egilinsky on alternative investments to stocks for investors.
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Pastor is desperately looking for returns that may want to look outside the feel of standard stocks and bonds for something a little different.
What type of alternative investment will give you the biggest bang for your -- our next guest.
Has over twenty years of experience with alternative investments he's here now -- -- few ideas.
-- -- -- is head of alternative investments at direction and he joins me now at good to see you thanks for something in this so with a minimal amount of investment jargon.
Tell us exactly what you mean by alternative investments.
Well it well direction we're we're looking at it is anything outside of long only stocks bonds and cash.
And asset classes that can perform differently than stocks and bonds especially when you need it the most during bear markets and equities okay -- we see higher interest.
In other words if you think that that that stock market is kind of tapped out and you think that you're not gonna get any.
Any kind of good yields from bonds with the with the Fed pushing juror percent interest -- that this is the fund to go to.
Yes areas like managed futures and commodities have tended to perform well during difficult periods and equities and bonds but also during periods of time it's performed.
During bull markets and equities and bonds has has more from a diversification standpoint.
Not an either or scenario something to complement a stock and bond.
Now I got to warn the investors out there -- listening is that is that while the S&P -- while the S&P 500.
Did extremely well in the past year 15% not your funds not necessarily so well when you when you because this is a bad -- bear market.
Well when you look at.
Managed futures for example for the most part they need sustainable price trends in this risk on risk off environment combined with.
Government intervention hasn't been ideal for managed futures but well -- -- I should just say it's had a negative return to 7% of the past year right -- -- -- -- -- negative 7% but if you look at the -- this is the -- fund is is the index commodity fund were talking now about the managed futures fund currently prevent Iraq.
Yes you know but if you look at managed futures for example the 1980s and ninety's were excellent decades for stocks.
And they were also -- decades for managed futures as well.
So is it would it be fair to call this a bear market -- what we're looking at right now and know I think this is something that has a low correlation to stocks and bonds.
But during bear markets and equities is tended to show up side.
Because of the fact that it creates and sustainable price trends okay let's talk about the commodity index we put it up briefly but let's put it up again if we can't if you're concerned about inflation.
This is the fun to get into correct.
Well yes commodities definitely historically.
Have shown some positive returns during inflationary type of environments -- the seven these into the early eighties as well.
Now again this is this is one it's been down to you would expected to be down because inflation is not taken off in the past couple years well if you look at it from a -- -- -- global consumption slowed down has -- -- global growth slowdown but there are individual commodities that have shown -- -- -- gold last year for example silver.
The agricultural markets because of the macro -- the drought that was created in the midwest so.
There are certain commodities that can take advantage.
Of performance even when the overall environment may not be inflationary not your clients what percent of their portfolio or they're putting in these funds.
Well we look at its have a meaningful impact in the overall portfolio we're looking at at least a 10% allocation.
And the majority of our clients are looking at anywhere from -- ten to 30% allocation in general do they do these funds instead of gold.
Well it doesn't have to be either or scenario we have broad basket of commodities that includes gold and gold as a low correlation.
To a lot of other commodities have done an either or scenarios of some -- -- gold they can own a broad basket of commodities like ours.
And something like managed futures as well that includes -- -- -- currencies as well as commodities.
Ed and -- go Lansky a direction head of alternative investments and managing director good to see it -- -- thank you very much appreciate them again.
