"For retail investors, the role of alternatives should be to reduce risk," said David Grecsek, director of investment strategy and research at advisory firm Aspiriant.
With the price of risky assets at these levels, he said his firm began using alternative strategies, such as market neutral investing, merger arbitrage and managed futures, since early 2014 to reduce overall risk.
"We have an expectation of lower returns and greater volatility going forward, so we're tilted toward risk reduction," he said.
To actually achieve a meaningful reduction of equity portfolio volatility, allocations to alternatives probably need to be in the range of 15 percent of assets, suggested Wescott's Rawdin. For clients particularly concerned about equity risk, he frequently recommends upping the allocation to bonds rather than venturing into alternatives.