In investment products, what does 'liquid alternatives' refer to?

Liquid alternatives refer to investment strategies that seek to provide absolute returns while maintaining a high level of liquidity. These products are designed to offer investors a way to diversify their portfolios beyond traditional asset classes such as stocks and bonds, while still allowing them to access their investments relatively easily. The term "liquid" emphasizes the ability to quickly enter and exit positions without significantly impacting the price, which is particularly important in volatile markets.

By combining a range of investment strategies—from hedge fund-like tactics to long/short equity, and global macro strategies—liquid alternatives aim to achieve returns that are uncorrelated with traditional market movements. This is vital for investors looking to mitigate risk in uncertain economic climates or seeking to improve the overall risk-return profile of their portfolios.

The other options do not accurately capture the concept of liquid alternatives. For instance, stocks with low volatility pertain to a specific type of equity investment and do not encompass the broader strategic approach of liquid alternatives. Government bonds, while a secure investment option, do not offer the flexible strategies and potential for absolute returns associated with liquid alternatives. Lastly, investments that have no market liquidity starkly contrast the essence of liquid alternatives, which focus on maintaining accessibility and active tradability.