Trends Watch: Liquid Alternatives
September 01, 2022
By Elana Margulies-Snyderman
EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.
This week, Elana talks with Lee Gladden, CEO, Witherspoon Asset Management.
What is your outlook for alternative investments?
We are very bullish on liquid alternatives, especially strategies that use liquid futures and options to take efficient long and short positions. When traditional portfolios are suffering, liquid alternative investments can provide timely risk mitigation. Commodities markets, in particular, have offered better opportunities than financial markets over the past 18+ months, and we see that continuing for at least the next two-to-three years. We agree with many investors who think it is unlikely that real returns for risk-taking in equities will be very high over the next five years. We like strategies that benefit from both longs and shorts, and believe they can provide downside protection in bear markets and short-term corrections and drawdowns.
What are the greatest opportunities you see and why?
We see big opportunities in the commodities markets -- more specifically in energy, grains, and metals. We think the macro environment should remain strong for several years. Commodities should benefit from an upturn in the commodity cycle as well as from the green recovery and trends in electrification. The climate crisis and clean energy reset provide many trading opportunities in energy and metals. The world food crisis affects grains and other agricultural commodities. These challenges are creating a structural shift in commodities markets that has been enhanced by geopolitical risks and inflationary pressures.
What are the greatest challenges you face and why?
Volatility creates both opportunity and risk. We seek to diversify our portfolio across uncorrelated traders and strategies that trade a diverse set of markets, with differing time horizons, all in aggregate to reduce the risk of having capital allocated in the wrong place at the wrong time.
What keeps you up at night?
Assault weapons in the hands of unhappy, isolated teens.
The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.