As alternative investments like private equity, real estate, and commodities become more popular for diversification, ETFs have emerged as an excellent vehicle for individual investors to gain exposure. ETFs provide easy access, intraday liquidity, and low costs compared to traditional alternative investment vehicles. This article explores three top-rated ETFs for accessing alternative asset classes in a diversified portfolio.
iShares Global Infrastructure ETF for global listed infrastructure
The iShares Global Infrastructure ETF (IGF) offers exposure to over 150 global stocks engaged in infrastructure businesses like utilities, transportation, and energy. Infrastructure assets tend to have high barriers to entry and stable cash flows, making them an attractive option for income-oriented investors. IGF provides much greater liquidity than direct ownership of infrastructure while maintaining a similar risk/return profile. The fund tracks the S&P Global Infrastructure Index and charges a low 0.43% expense ratio.
IQ Hedge Multi-Strategy Tracker ETF for hedge fund strategies
The IQ Hedge Multi-Strategy Tracker ETF (QAI) aims to replicate returns of various hedge fund strategies. It follows a quantitative rules-based approach to pick stocks, ETFs, and options using strategies like long/short equity, market neutral, event-driven, and macro. QAI provides broad diversification across managers, asset classes, and strategies that is difficult for individual investors to achieve on their own. It offers hedge fund-like returns with complete transparency and much lower fees than traditional hedge funds.
Invesco DB Commodity Index Tracking ETF for commodities
The Invesco DB Commodity Index Tracking ETF (DBC) offers diversified exposure to 14 of the most heavily traded physical commodities. Its largest allocations are to energy products like crude oil, heating oil, and natural gas. An index-based strategy eliminates active manager risk. Commodities like oil and metals have historically had low correlations to stocks and bonds, making DBC an excellent portfolio diversifier. It provides a simple way to gain commodities exposure without holding the physical assets.
ETFs like IGF, QAI, and DBC allow individual investors to access alternative asset classes that were previously available only to large institutions. They provide diversification benefits and additional sources of returns while maintaining liquidity, transparency, and low costs.