Our series on finding diversification amid the crisis

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On February 19, stocks set a record high. And now, just a few weeks later, markets are again setting records – but for all the wrong reasons: the swiftest equity market correction in history, which quickly became the swiftest bear market in history. The largest one-day point drop in equities since 1987. The highest VIX level ever. The lowest U.S. Treasury rates ever. Trading circuit breakers tripped three times in one week for the first time ever. What a month indeed.

With these wild swings, many portfolios are being tested for the first time in a long while, and many investors may be finding themselves less diversified than they had hoped as many asset classes have moved in virtual lockstep.

In this research note, we discuss what happens when many traditional sources of portfolio diversification fail, and how liquid alternative funds may offer a compelling case for diversifying exposure.

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