Effectively hedging portfolios is a challenging task that involves a careful weighing of tradeoffs. Dedicated hedges can cushion a portfolio during times of stress, but they also tend to lose value quickly while markets rise. Low-correlation exposures such as Alpha Seeker have the ability to profit regardless of the direction of broad markets, but may not be perfectly anti-correlated during every market decline. With the right vehicles in the right combination, it may be possible to construct an exposure that retains most of the benefits of hedges while greatly reducing their cost.

Presently, VIX prices remain mostly higher than would normally be expected for a quiet equity market near all-time highs. So far, this has just been been another “wall of worry” for stocks to climb, but with the historically turbulent fall season and the Fed’s Jackson Hole symposium approaching, a change could be in store.

Equity markets were higher again in June, with recently-battered tech names roaring back relative to US small cap stocks. This resulted in a mostly sleepy VIX aside from a slight disturbance around the mid-month Fed meeting which hinted at sooner-than-expected rate hikes. Notably, treasury yields dropped on the announcement, apparently signaling a policy error that would choke growth