Liquid alternatives refer to a broad range of vehicles offering investors exposure to a variety of strategies, strategies which have traditionally been the preserve of institutional or high net worth clients. Compared to hedge funds, they often have lower investment minimums, fees and enable more frequent trading, making them a more accessible alternative for retail investors. Such strategies may include long-short strategies, merger arbitrage, market neutral, non-directional, systematic, tactical and alternative asset strategies such as real estate, commodities, private debt and private equity.

The main advantage that liquid alts offer to investors is greater accessibility than traditional hedge funds. They are typically more liquid than hedge funds, meaning that investors can readily buy and sell shares in the fund, and require lower investment minimums. This makes investments more accessible for retail investors.

The main drawback of liquid alternative investments is that they can be misunderstood or misused. They can lack transparency and may involve unique and often opaque risks, are generally illiquid during volatile markets, and often have higher fees than traditional investments. Furthermore, they are often unsuitable for buy-and-hold retail investors, but appeal more to those who engage in active management of their investments.

In conclusion, liquid alternatives are an evolving area of investing that offer retail investors unique opportunities to access alternative investment strategies previously only available to institutional investors. However, they come with unique risks and often higher fees, and investors should take care to understand the structure and liquidity of such products before making a commitment.