Recently it seems like a lot of people on this sub were undiversified in 2018 and panicked (Who knew being 100% QQQ wasn't a perfect investment strategy?!). That's why I decided to make a list of asset classes that have a low/medium correlation to the S&P 500 to reduce your portfolio's volatility (I'm not saying any of them are good/bad). Some of them have performed badly, but keep in mind that a 5yr return doesn't mean much.
I'm not saying investors should definitely buy these, I just think it would be nice to discuss alternative investments that are available in the ETF market.
S&P 500 5yr return: 9.18%
| Asset class | Recommended ETF | Correlation to SP500 | 5YR Return |
|---|---|---|---|
| REITS | VNQ | 0.46 | 7.73% |
| Managed Futures | FMF | 0.19 | -1.63% |
| Commodities | DBC | 0.29 | -8.77% |
| BDCs | BIZD | 0.60 | 2.41% |
| Agg. Bonds | BND | -0.14 | 2.44% |
| Long Term Treasuries | TLT | -0.22 | 6.01% |
| Cash | NEAR | 0.26 | 1.21% |
| M&A Arbitrage | MNA | 0.33 | 3.99% |
| CEFs | PCEF | 0.74 | 4.93% |
*Correlations are from 2014 to 2019
If you know about any other investments that would be considered uncorrelated to the S&P 500 or have any comment on the ETFs mentioned above, feel free to comment!
Submitted January 10, 2019 at 07:32PM by etienner http://bit.ly/2VJz2Pa
