As alternative investments gain ground, financial planners may mention non-correlation as a prime benefit. By zigging when traditional asset classes zag, alternatives can reduce overall volatility and perhaps shrink clients’ stress levels as well.

However, non-correlation can be a mixed blessing in bull markets. When the broad U.S. stock market rises more than 30%, as it did in 2013, clients may decide they love correlation; why bother with an alternative investment when times are good? Advisors who believe in alternatives might have to explain their tactics.

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