An Alternative to Alternatives?

For the five years ending in 2013, U.S. public equity markets returned between 16% and 23% annually.  In one of the strongest ever periods for equity markets, investors' portfolios benefitted from core equity investments while allocations to anything else became a drag on performance and an opportunity cost for portfolios.  Alternative investments, including equity-oriented long/short hedge funds, have struggled to keep pace with the U.S stock market.  In this accelerating equity market, hedging equity market risk has hampered performance, and making money from buying and shorting mispriced stocks proved difficult for most of the period.