Today on the show, we welcome Brett Dley, Portfolio Manager of the Fidelity Market Neutral Alternative Fund. He explains how a long/short investing strategy may be successful in periods of volatility, and where he sees opportunities in 2024. Brett describes market-neutral alternative funds as an equity-based fund without any correlation to separate underlying assets. It operates by concurrently buying one stock and shortening another to maintain a net exposure of zero, and engages in approximately 35 to 40 pair trades. This allows it to create long and short positions to focus on stock-specific differences. Brett discusses the fund’s role for investors approaching retirement and its emphasis on reducing portfolio volatility. He adds by incorporating an investment with lower volatility, investors can potentially navigate market fluctuations more comfortably and prevent impulsive selling decisions during downturns. He also says in the current macro environment, the fund is specifically deployed in response to market conditions and is positioned to mitigate potential downside in a frothy market.

Recorded on February 1, 2024.

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