Alternative investments should comprise as much as 20%, 30% or even 50% of a client's portfolio, according to an online panel of analysts and portfolio managers hosted by Envestnet.

Alternative investments, which Envestnet's chief investment strategist Tim Clift defines as anything that uses leverage, shorts or derivatives, have grown dramatically in popularity over the past three years. According to a report by Boston-based financial research firm Cerulli, demand nearly tripled between 2008 and 2011 as assets under management rose from $78 billion to $214 billion compared to 55% overall growth in the mutual fund industry. Firms launched a record 72 new alternative mutual funds in 2011.

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