Portfolio manager David Way discusses the opportunities with liquid alternatives as an emerging asset class, and introduces his fund, Fidelity Long/Short Alternative Fund. With this fund, his approach is to be fully exposed to the markets, while having the ability to short-sell stocks. In conversations with clients, Dave has found that many investors think alternative investments are inherently riskier, and that they are doing something very new. He believes, however, the key message should be that being able to short could help reduce overall portfolio risk. Dave’s focus is on identifying potential risks, so as to hedge against them. Shorting can also be beneficial with high-valuation companies, because he can take long positions in what he believes to be the better ones, and short-sell others with a similar business but worse fundamentals, in order to help protect on the downside.
Recorded on December 15, 2020.