Market Mediocrity Whets Appetite for Risk

Updated from 7:36 a.m. EST

Postelection rally aside, U.S. equity markets have disappointed this year.

After many ups and downs, the three major markets are near where they were 10 months ago, despite a hot start in January. For the year through Nov. 4, the Dow is down about 0.6%, the S&P 500 is up almost 5%, and the Nasdaq is 1.7% above where it started the year. That's nothing compared to the enormous gains of 2003, the first in years.

To boost returns during the severe market downturn that started in 2000, professional money managers have been casting their nets wider and deeper for alternative investments: emerging markets, oil and gas partnerships and even hedge funds. ...