Investing in Liquid Alternatives

Liquid alternatives seek to enhance returns, diversify and/or provide risk mitigation by investing in public markets, such as equities, fixed income, commodities, currencies, and options, or in derivatives tied to the performance of those markets. Unlike traditional buy-and-hold strategies, liquid alternatives usually have the flexibility to take both long and short positions, the latter seeking to benefit from declining asset values. Liquid alternatives are typically offered in liquid structures, such as mutual funds and ETFs. They pursue a range of strategies, such as long-short equity, relative value, options-based, and global macro strategies.

Liquid alternatives can be used to pursue different investment objectives, including return enhancement, portfolio diversification, and/or risk management. Their returns generally have low correlation to broad movements in the stock and bond markets, so liquid alternatives can offer investors a way to complement their exposure to those traditional markets.

There are several potential benefits to investing in liquid alternatives:

• Pursue investment objectives: Liquid alternatives may help grow your wealth, diversify your portfolio and manage risk by generating returns that may be less correlated to traditional markets.
• Flexibility: Unlike traditional "buy and hold" strategies, liquid alternatives have the flexibility to take both long and short positions and use derivatives to pursue a variety of risk and return objectives.
• Structure: They are typically structured like mutual funds or ETFs and can generally be bought and sold daily.
• Transparency: These investments trade in public markets and provide regular updates on their performance, holdings, and strategies.

When considering investing in liquid alternatives, it’s important to understand the associated risks. Here are some key factors to keep in mind:

• Market impact: Like all investments, liquid alternatives are subject to market fluctuations, which can affect their value.
• Complexity: Some liquid alternatives may pursue complex strategies, and it may be difficult to understand how they can affect your overall portfolio.
• Performance: Liquid alternatives, like any type of investment, can experience periods of underperformance.
• Leverage: Many liquid alternatives use leverage to enhance returns, which can also amplify losses.

Each fund and strategy may present their own unique risks. Before investing carefully review each funds' prospectus and weigh the risks against your financial goals.

At Fidelity, you can purchase a variety of liquid alternatives on Fidelity.com using the Buy button on a specific fund page. Note that for certain funds you may need to review a designated investment agreement and attest that you are an experienced investor who understands the risks that come with that investment.