Alternative investments have taken off in recent years, and in a recent WealthTrack interview, Lipper’s Robert Jenkins and Altegris Advisors’ Lara Magnusen discuss the risks and rewards of these investment vehicles.

Many alternatives now come in a liquid mutual fund form so they can be bought and sold daily on an exchange, making them far more accessible to average investors than in the past. Jenkins says alternative strategies are usually hedge fund-like strategies that can use such tactics as shortening or derivatives, or which can invest in multiple asset classes. Magnusen, meanwhile, says true alternatives are absolute return strategies that can go long or short, and which can make money on the downside. They are the sort of strategies that are typically available in a private structure but which are now available in a liquid format. Alternatives, Jenkins says, can be a good way to add diversification and correlation benefits to a portfolio. He and Magnusen talk about why alternatives have become so popular lately, and Magnusen talks about why “unconstrained bond funds” are a good option for investors in light of potential interest rate increases.

[youtube=https://www.youtube.com/watch?v=_3JWDOd24AU]