"There is not as much interest in the alternatives space as one might expect, given the volatility in markets," said Tayfun Icten, a senior analyst at research firm Morningstar covering alternative investing strategies. "We have not seen a healthy comeback in alternatives."

With volatility returning to the stock and bond markets and valuations of almost all financial assets very high, alternative investments and alternative investing strategies should be popular. They're not.

The financial crisis, when virtually all financial assets except Treasury bonds fell dramatically, gave life to the so-called liquid alt funds industry. The funds invest in a wide variety of alternative assets and hedge fund-like strategies intended to not correlate with the returns on stocks and bonds.

With such investments formerly available only to institutions and high-net-worth individuals, retail investors flocked into the hundreds of funds that were launched since the crisis.

Total assets in the alt funds stood at $223 billion at the end of March, with inflows of $1.9 billion for the month after falling about half a billion in February. Last year the category took in $4.8 billion in new money and another $5 billion in January.

"There was rapid growth in the liquid alternatives fund space for six or seven years, but it has basically stalled since mid-2014," said Icten.

No doubt the strong stock and bond markets post-crisis have tempered enthusiasm for expensive funds that offer uncorrelated (and lower) returns than on traditional assets. But the slowdown in growth has also been a result of consolidation in the industry. Many of the investing strategies of alt funds — such as market neutral, and long/short equity and credit — can manage only certain amounts of assets before the strategy starts to deteriorate. Many of the biggest and most popular funds from companies such as AQR and Boston Partners have closed to new investment. Other funds that failed to attract enough assets simply closed down.

"We're seeing consolidation in the industry," said Ictel. "The funds are getting bigger, and the number of overall funds is still falling."

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The demand for alternatives in the form of hedge funds also has moderated in the past two years, though the interest picked up marginally last year. After seeing outflows of $112 billion in 2016, the hedge fund universe took in $9.8 billion in new assets last year and managed a record high of more than $3.2 trillion at the end of December, according to data from Hedge Fund Research.

While several large institutional investors — most notably, the California Public Employees' Retirement System — abandoned hedge fund investing programs in the last few years because they were too costly and complicated to manage, many large institutions remain committed to the asset class.

The industry also has had to improve its offering in terms of cost. The "Two And Twenty" compensation model for hedge funds (2 percent of assets and 20 percent of profits) has gone by the wayside for all but the best performers. Institutions and high-net-worth investors are much more apt to negotiate hard on fees for hedge funds now.

The interest is still there, however.

"We still see consistent growth across investor groups," said Matt Jiannino, head of Quantitative Equity Product Management at Vanguard. "Some are interested for diversification purposes, others for risk reduction or return enhancement."

Vanguard's Quantitative Equity Product Management group manages $38 billion across a number of funds predominantly running market neutral and long/short equity strategies. They are marketed to institutions and financial advisors and are intended to diversify the risks of holding bonds and cash. The funds are accessible to individual investors, with most having a minimum investment threshold of $3,000.

With interest rates rising and the stock market increasingly volatile, Jiannino sees the demand for alternative investing strategies picking up. "Equity and fixed-income return expectations are low, and people are looking for ways to diversify their returns," he said.