Why Alternative Investments?

With stocks back at all-time highs and the financial crisis, internet bubble, and all the mini shocks in between fading further and further into memory – why do investors need anything alternative in their portfolios?

It’s a question we see play out in the headlines frequently, with the seemingly conflicting articles about big pensions (like Calpers) exiting hedge funds while hedge fund assets continue to climb ever higher and higher.  So why are so many institutional (and now smaller investors thanks to Liquid Alt mutual funds) continuing to put money to work in Alternative Investments?

Part of it is because they have massive exposure to a singular return stream in the equity markets, part of it is because they have to add more exposure to gain any benefit from the allocation. Part of it is because many so-called alternatives are really just equity market-like allocations. Suffice it to say the reasons are many and complex. Which seemed like just the sort of thing for us to breakdown into more easily understood bite size pieces with our latest whitepaper, Why Alternatives?

Here’s a peek:

Visualizing Alts in a Portfolio

What’s this ‘best of both worlds’ diversification actually look like? How does a portfolio actually benefit from an allocation to Alternatives? Here’s one example, comparing a traditional 60/40 portfolio to a portfolio containing a 30% allocation to managed futures. You can see a drastic difference between the two portfolios, with risk drastically reduced (worst loss going from -32% to -21%, and worst 3 year period from -20% to just single digits at -7%), and returns actually going up. [past performance is not necessarily indicative of future results].

And what you’ll find in the rest of the research piece:

1. the BIG problem with a traditional portfolio
2. Visualizing Alternatives in a Portfolio
3. Why current investors like Alternatives
4. Learn the Types of Alternative Investments
5. How much you need to allocate based on your expectations
6. Outside voices on why alternative investments are important

Learn more about the world of Alternative Investments. Click here to download our research paper and see why others are saying “because it solved a big problem” to the question of “Why Alternatives?”