On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research, Todd Rosenbluth, discussed the iShares Systematic Alternative Active ETF (IALT) with Chuck Jaffe of Money Life. The pair discussed several topics related to the fund to give investors a deeper understanding of the ETF.

Chuck Jaffe: One fund, on point for today. The expert to talk about it. This is the ETF of the Week!

Welcome to the ETF of the Week, where we get the latest take from Todd Rosenbluth, the Head of Research at VettaFi. And at VettaFi.com, you’ll find all the tools you need to make yourself a savvier, smarter investor in exchange-traded funds, and to get more details on the new, newsworthy, trending, and timely exchange-traded funds that we talk about here. Todd Rosenbluth, happy New Year! It’s great to chat with you again.

Todd Rosenbluth: It’s great to be back in 2026 with you!

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The iShares Systematic Alternatives Active ETF, IALT. I-A-L-T.

Chuck Jaffe: IALT, the iShares Systematic Alternatives Active ETF. You know, only four words in that name before “ETF”, but they each say something, because you’ve got “iShares” — that tells you “big company” — but you’ve got “Systematic,” “Alternatives,” and “Active.” So are all of those words why this comes together as ETF of the Week? Or is there one or two specific things you’re focusing on?

Todd Rosenbluth: So, it’s a combination of things. This is a relatively new ETF. And the listeners may recall that when we were recapping the year, we mentioned that more than 1,000 ETFs had launched in 2025. There was no way we were going to cover all of them. And in fact, IALT, this iShares alternative ETF, launched in December, about a month ago.

But it gives you exposure to liquid alternatives through an ETF that can fit into a broadly diversified portfolio. It’s run not only by a team at iShares — it’s an iShares ETF —but also by a team that manages a lot of other systematic active ETFs that have been very popular. So, this caught my eye when it launched.

I wanted to give it roughly a month or so of history—not that we know much from a performance standpoint, but just that it’s aged a little bit. I think we’re going to see more and more about diversification and alternatives in 2026. And iShares, being the leader that they are, is a key for them to take a closer look at.

Chuck Jaffe: Alternatives mean a lot of things, and they mean different things to different people and different managers. So, what alternatives is this fund into? And then, what’s the active portion? How does it actively manage those alternatives?

Todd Rosenbluth: Right. So, this is a couple of things here. This is “alternatives”, in that it’s liquid alternatives — so what you would normally think of as a long-short or a global macro strategy or some credit strategies. This is going to be multi-asset because it will require multiple approaches. It’s going to choose the investment styles from the alternatives world.

And the active management is choosing which of those to be able to implement and in what time period, and then how to implement that. And so, a month in, the portfolio is mostly fixed income and cash—very little equities. There’s some short exposure to some individual countries.

That’s a sign to me that, first of all, this is just a month in. It’s roughly $75 million, $100 million in assets under management. But it’s going to be interesting to see how, as the market zigs and market zags, how this holds up, how this performs, and how this provides diversification.

But since you alluded to it, let me also ask: to me, the alternatives are cryptocurrency and other strategies that are not necessarily hedge-fund-like. And part of why I called out this fund from iShares is because [of]its success with IBIT. I think we talked about IBIT — that’s the iShares Bitcoin ETF that launched roughly two years ago.

It already has over $75 billion in assets under management — not million, but $75 billion in assets — by essentially being a large, leading provider of ETFs and offering investors easy access to something that could fit into a broadly diversified portfolio.

IALT, this new ETF, is different, but it’s going to give you something that is, for lack of a better phrase, an alternative to your traditional equity or fixed income or even gold exposure.

Chuck Jaffe: Well, see, this is why we have these discussions and have to define everything. Because technically, I use the broadest possible definition of alternatives. If you think of a portfolio as stocks, bonds, cash, and maybe real estate, alternatives to me are the other things besides that.

So, there’s a lot in there. But that actually is an interesting thing because, as you pointed out, so far this fund has a lot of fixed income. But that active means that I’m not paying the standard ETF, super-low fixed income expense ratio, am I?

Todd Rosenbluth: No, you’re not. The expense ratio is 99 basis points, which is actually in the range of what you might think an alternatives strategy would be. Alternative mutual funds are actually — going from memory here — usually well over 100 basis points. I haven’t done the analysis to see if this is better. I assume this is cheaper than what you’d find in the mutual fund wrapper, but you get the benefit of the ETF vehicle.

So, many more investors [and]advisors are building ETF-only portfolios, and they’re owning the S&P 500 or the Bloomberg Aggregate or even Bitcoin exposure through the ETF vehicle.

This is not the first liquid alternative ETF, but this is the first that I’m aware of from a top-tier asset manager that has the credibility to be able to offer you everything else within the portfolio, as opposed to being an alternative specialist or a hedge fund replication-like specialist.

iShares is an ETF specialist, but you can be able to get that exposure. But I presume, because it’s iShares, that you’re getting the benefits of its scale at just under 100 basis points.

Chuck Jaffe: Yeah. And certainly as it grows, you would hope that you’re going to wind up seeing more benefits of that scale. This fund, again, not even a month old, I don’t think, or maybe just a month old as we record this. So, with $75 million, it’s already achieved enough critical mass that you’re not, like, worried it’s going to vaporize tomorrow.

I am curious, as we see the performance get a little bit more mature, if you wind up seeing it stay mostly in alternatives that are basically fixed income alternatives with a portfolio like it has right now, would you still be happy? Because that 99 basis points makes sense in the alt world. And by the way, the last time I looked, I would confirm what you were saying, which is if I was looking at an alt traditional fund, I’d be paying more.

But again, if what I’m getting under the hood is more fixed income or mostly fixed income, 99 basis points is wicked expensive relative to a fixed income fund. So are you hoping, like if we were to look back at this fund, or if somebody wants to put this on their watch list, that they will see more that they consider true alternatives down the line?

Todd Rosenbluth: So, I think with alternatives, it’s hard to classify what is and is not inside the portfolio, even though, yes, when I look at it on their website right now, I see fixed income the way that it’s defined. I think it’s worth seeing and tracking how this fund — what its exposure is and how it shifts. But what I’m actually interested in looking at is how it ends up performing.

The goal of this is for it to perform differently and for it to hold up better in times of market volatility, or even go up during times of market volatility. So when the stock market goes down, this is providing you the diversification that you wouldn’t necessarily expect. And we’re in — we just came off of three straight very strong years for the S&P 500.

You know, it was in the teens percentage this time around; I believe it was over 20% in prior years. We’ll see if that happens to repeat itself. I think many people come into the year expecting it to see, you know, more muted returns, closer to 10% and see some more volatility. And that’s when I think an alternative strategy has the chance to demonstrate its success during that level of market volatility.

So, I do think this portfolio will shift. That’s the active component, and its exposure will shift. But the performance—we’re obviously a month in, give or take. We don’t have a great sense of how this is going to perform. It is worth keeping on your radar and watching. Or maybe you’ll get there, putting it into a small slice into your portfolio.

Chuck Jaffe: Speaking of that small slice, I mean, because this is a new fund and it’s liquid alts, there’s not really much that you have or any investor would have in their portfolio that takes up this space unless they’re doing a whole bunch of high-end private alternatives. But does everybody need this?

Is this the kind of thing that, you know, as we get out there and you try to make your portfolio a little more inclusive, everybody’s going to want this for the diversification impacts? Or is this something that—you know, it’s systematic liquid alts, it’s kind of sophisticated—if you’re keeping a simple portfolio, you can bypass this?

Todd Rosenbluth: If you have an ETF portfolio that is just the S&P 500 or an ETF that’s tracking it and the Bloomberg Agg and maybe one international ETF, you’re probably not looking for something to add into the broader mix, and keeping it simple has worked for you. But this is quite different than IBIT, the Bitcoin ETF that I referenced earlier.

But I think there’s a—some—and this is more of a risk-off, perhaps, story as opposed to the risk-on that you get with Bitcoin. But I think it’s similar to what we saw in the last year or two. I guess — you know, IBIT is about to hit its two-year anniversary. We saw that advisors and investors had a low-single-digit percentage exposure to Bitcoin, as a way of getting diversification, getting exposure to a different asset class, and using the ETF wrapper to do that.

I think that’s something similar to what we’re going to find with liquid alternatives. It’s going to be a low-single-digit percentage for some investors. And I like the fact that this is coming from iShares. I like that this fits into their broadly diversified suite of products. And I would expect to see, as people are using iShares-led strategies, that we find this within the portfolio going forward.

Chuck Jaffe: It’s IALT, I-A-L-T, the iShares Systematic Alternatives Active ETF—the ETF of the Week from Todd Rosenbluth at VettaFi. Todd, great to see you again. Look forward to the next one!

Todd Rosenbluth: Sounds great, Chuck. Thanks!

Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. And yeah, I’m Chuck Jaffe, and I’d love it if you check out my hour-long weekday podcast; by going to MoneyLifeShow.com, or you can search for it wherever you find your favorite podcast.

Now, if you’re searching for information on your favorite ETFs, or maybe the ones that will become your favorite ETFs, make sure you check out VettaFi.com. And they’ve got a full suite of tools that will help you in that search. Get more and better information there. On X, at @Vetta_Fi; Todd Rosenbluth, their Head of Research, my guest, he’s on X as well; he’s @ToddRosenbluth.

The ETF of the Week is here for you every Thursday. Make sure you don’t miss an episode by following it on your favorite podcast app. And we’ll be back with another ETF for you to consider next week. Until then, happy investing, everybody!

For more news, information, and analysis, visit VettaFi | ETF Trends.

Note: This article was created in part through assistance from AI tools. The content has been thoroughly reviewed and edited by the author.