Between June 24 and June 27, a traditional 60% equity/40% fixed income index portfolio was down 2.7%2, while the LAI Multistrategy Peer Group, which represents diversified baskets of liquid alternative strategies, fell 0.8%. Furthermore, certain strategies within the LAI Peer Groups were able to profit during the Brexit turmoil. For example, within the LAI Tactical Trading/Macro Peer Group, managed futures strategies capitalized on the rising price of gold, the falling British pound, and declining interest rates. This LAI Peer Group ended the quarter up 0.5%, and is the best performing Peer Group year-to-date (up 1.7%).
Because US stock and bond markets quickly recovered from the Brexit shock, many traditional portfolios ended the second quarter in positive territory3.
Although the initial impact of the Brexit vote was short-lived in the US, a deep uncertainty in the markets remains – investors have withdrawn assets from US equity mutual funds every month this year4. We continue to believe liquid alternative investments can reduce the impact of market shocks, and help investors maintain their portfolio allocations over the long term.
