The Case for Alternative Investments
Alternative investments provide access to investment opportunities generally not available in a traditional stock/bond portfolio allocation. With enhanced return and income potential, and a wide array of diversified strategies, alternative investments can be a valuable addition to a portfolio. They can also be highly effective when the markets are experiencing greater volatility, higher inflation, and increased correlations between traditional assets.
What Can Alternative Investments Offer?
ENHANCED RETURN AND INCOME POTENTIAL
Alternative investments have historically delivered higher returns and income than traditional equity and fixed income investments.1
BROADER DIVERSIFICATION AND LOWER CORRELATION
Alternative investments span multiple asset classes and investment strategies, helping to dampen volatility, increase diversification, and lower correlation in a portfolio.
LARGER
OPPORTUNITY SET
Alternative investments offer exposure to an array of unique investment opportunities away from long-only, publicly traded stocks and bonds.2
Using Alternative Investments in a Portfolio
Private Equity – Potential for higher returns
Private Credit – Alternative source of income
Hedge Funds – Portfolio diversification
Real Assets – Income and inflation protection
BENEFITS
KEY RISK CONSIDERATIONS
Key risk considerations may include, but are not limited to, the following:
Please contact your financial professional or a fund manager to learn more.
1. Source: Pitchbook. Public markets include S&P 500, Russell 3000, and MSCI World. Data as of 12/31/21.
2. There are only 2,800 public companies with annual revenues greater than $100 million. That’s a small slice of corporate America, where there are 18,000 private businesses of that size. Source: Hamilton Lane. “Private Market Investing: Staying Private Longer Leads to Opportunity.” April 14, 2022.
IMPORTANT INFORMATION
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ALTERNATIVE INVESTMENTS ARE CONSIDERED COMPLEX PRODUCTS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. Prospective investors should be aware that an investment in an alternative investment is speculative and involves a high degree of risk. Alternative Investments often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; may not be required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. There is no guarantee that an alternative investment will implement its investment strategy and/or achieve its objectives, generate profits, or avoid loss. An investment should only be considered by sophisticated investors who can afford to lose all or a substantial amount of their investment.
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