In the second quarter, Alternative Investments ("Alternatives") generally had positive performance with tangible assets (commodities and real estate) posting strong returns. Managed futures was a notable outlier with a negative 2nd quarter, lagging not only other Alternative categories but traditional asset classes as well. Year-to-date, most Alternative categories are keeping pace or outperforming traditional asset classes, with once again tangible assets leading the way. Short bias strategies have had considerable success most likely due to a combination of periodic freefalls in the broader equity markets, increased volatility, and wider dispersion in both sector and single name returns. Lagging categories were primarily focused in the equity markets (hedged equity and equity market neutral). Managed futures, commodities, and global macro historically have shown low correlations to stocks and bonds and based upon monthly correlations over the past two years, this continues to be the case. Other Alternative categories, while having higher correlations with equities, generally do so with considerably less volatility.

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