Best Alternative ETFs
Hedge-style strategies in an ETF wrapper
ETFs tracked
1,238
Avg TER
0.81%
Median Beta
0.56
Alternative ETFs package strategies that traditional stock-and-bond funds can't run: managed futures, long-short equity, market-neutral, merger arbitrage, global macro, tail-risk hedging, covered-call overlays. Their shared thesis is producing returns that don't correlate with the S&P 500, which is what makes them useful during the regimes when stocks and bonds fall together.
The standout example is managed futures in 2022. DBMF, KMLM, and DBEH returned 15–25% while the S&P 500 dropped 18% and the aggregate bond index dropped 13%. That year validated the core argument for alternative allocations: a 10–15% sleeve in genuinely uncorrelated strategies can preserve capital when the traditional diversifiers fail.
Costs are structurally higher here. Managed futures ETFs charge 0.85–1.00%. Multi-strategy funds sit at 0.70–0.95%. Long-short equity funds often exceed 1.00%. That's 10–30x what broad-market index funds charge. Some of the premium reflects genuine operational complexity; some is a legacy of hedge-fund pricing norms that haven't fully compressed to ETF standards.
Beacon is deliberate about what gets included in this bucket. Leveraged and inverse products, single-stock wrappers, and closet indexers are filtered into separate flagged categories. The alternative pages surface funds whose strategies have durable academic foundations — trend-following, market-neutral arbitrage, multi-strategy — not marketing labels.
Who this is for
- Investors overweight in equities looking for non-correlated diversification
- Portfolio builders allocating 5–15% to strategies that can profit during stock-bond drawdowns
- Not suitable as a standalone core holding — these are supplements, not substitutes for equity exposure
Top 10 ETFs
Browse all 1,238 alternative ETFs
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Open screenerFrequently asked questions
- What is an alternative ETF?
- An alternative ETF runs a non-traditional strategy: managed futures, long-short equity, market-neutral, global macro, multi-strategy, or similar hedge-fund-style approaches. The common feature is that returns are designed to have low or negative correlation with the S&P 500, unlike traditional long-only stock and bond funds.
- Are alternative ETFs worth the higher fees?
- The case is strongest for strategies with demonstrable diversification value in stress — managed futures is the best example, delivering +20% while stocks -18% and bonds -13% in 2022. The case is weakest for complex wrappers where the benefit over a simple stock-bond mix isn't empirically clear. Cost-effectiveness varies dramatically within the category.
- How much of my portfolio should be in alternatives?
- Most institutional frameworks suggest 10–20% in true diversifiers. Individual investors often size smaller, 5–10%, because alternative strategies can lag during long bull markets, which is psychologically hard to tolerate. The All-Weather and Permanent Portfolio models allocate 25%+ to non-equity non-bond assets.
- What's the difference between managed futures and market neutral?
- Managed futures (DBMF, KMLM) run systematic trend-following across commodities, currencies, and rates — directional bets that follow momentum. Market-neutral funds (BTAL, MNA) pair long and short positions to target zero net market exposure. Managed futures often profit during crises; market-neutral aims for steady low-volatility returns regardless of regime.
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