Market
Memos from Howard Marks: Ruminating on Asset Allocation
Alternative Investments
Mastering the Opportunity
The Case for Alternatives
We believe including alternatives as part of a well-diversified portfolio can help improve investor outcomes. Explore the potential benefits.
Attractive Risk-Adjusted Returns
Exposure to Alternatives Has Historically Improved Returns, Lowered Risk
Risk and return analysis
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Past performance is not indicative of future results. For illustrative purposes only. Information does not represent returns of any investment. An investor cannot invest in an index. For the period January 1, 2008 through September 30, 2023.
Global Bonds represented by Bloomberg Global Aggregate Bond Index; Global Equities represented by MSCI World Index; Commodities by the Bloomberg Commodity Index; Hedge Funds represented by the HFRI Weighted Composite Index; Listed Infrastructure represented by the FTSE Global Core Infrastructure 50/50 Index after December 31, 2014, data from July 30, 2008 through December 31, 2014 represented by the Dow Jones Global Infrastructure Index and prior to July 30, 2008, data represented by an equal blend of the Datastream World Gas, Water & Multi-Utilities Index and Datastream World Pipelines Index. Listed Real Estate represented by FTSE EPRA Nareit Developed Index; Private Credit represented by Cliffwater Direct Lending Index; Private Equity represented by Preqin Private Equity Index; Private Infrastructure represented by Preqin Private Infrastructure Index; Private Real Estate represented by Preqin Private Real Estate Index. Risk-Free Rate represented by the ICE BofA US 3-Month Treasury Bill. Source: Bloomberg, HFRI, Morningstar, Preqin.
Hedge Against Inflation
Alternatives Have Historically Outperformed Traditional Asset Classes Amid Inflation
Average quarterly returns when inflation is above average
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Past performance is not indicative of future results. For illustrative purposes only. Information does not represent returns of any investment. An investor cannot invest in an index. For the period January 1, 2008 through September 30, 2023.
Global Bonds represented by the Bloomberg Global Aggregate Index; Global Equities represented by MSCI World Index; Private Credit by Cliffwater Direct Lending Index; Private Equity by Preqin Private Equity Index; Private Infrastructure by Preqin Infrastructure Index; Private Real Estate by Preqin Real Estate Index. Inflation is defined as Seasonally Adjusted CPI-U. Periods of above-average inflation are defined as quarters where CPI was above its historical average. During the time period analyzed, average CPI was 2.44% and there were 21 such quarters. Please see disclosures for additional information. Source: Bloomberg; Preqin.
Diversification
Private Investments Exhibit Relatively Low Correlations to Stocks and Bonds
Correlation analysis
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Past performance is not indicative of future results. For illustrative purposes only. Information does not represent returns of any investment. An investor cannot invest in an index. For the period January 1, 2008 through September 30, 2023.
Global Bonds represented by Bloomberg Global Aggregate Bond Index; Global Equities represented by MSCI World Index; Listed Infrastructure represented by the FTSE Global Core Infrastructure 50/50 Index after December 31, 2014, data from July 30, 2008 through December 31, 2014 represented by the Dow Jones Global Infrastructure Index and prior to July 30, 2008, data represented by an equal blend of the Datastream World Gas, Water & Multi-Utilities Index and Datastream World Pipelines Index. Listed Real Estate represented by FTSE EPRA Nareit Developed Index, Private Credit represented by Cliffwater Direct Lending Index, Private Equity represented by Preqin Private Equity Index, Private Infrastructure represented by Preqin Private Infrastructure Index, Private Real Estate represented by Preqin Private Real Estate Index. Source: Bloomberg, Preqin.
A Comprehensive Guide
We believe the most effective path to investment success has long been diversification—a blend of investments that offers protection during market downturns while seizing growth opportunities. However, diversification has encountered significant hurdles as correlations among traditional investments have shifted in recent years.
Alternatives offer a potential solution to this diversification dilemma.
Alternatives offer a potential solution to this diversification dilemma.
A Comprehensive Guide
We believe the most effective path to investment success has long been diversification—a blend of investments that offers protection during market downturns while seizing growth opportunities. However, diversification has encountered significant hurdles as correlations among traditional investments have shifted in recent years.
Alternatives offer a potential solution to this diversification dilemma.
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Examining the Possibilities
"Alternative investments" (also informally referred to as "alts") encompass a wide array of asset classes, strategies and vehicles, each with a role in an overall portfolio.
At The Alts Institute, we’ve curated the essential content to give you to-the-point summaries of the concepts and benefits underpinning the potential of alts.
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Private Credit
Private credit generally refers to loans made directly between a borrower and a non-bank lender. Stricter regulations have caused banks to tighten lending standards, prompting many companies to migrate away from traditional sources of capital and turn to private lenders for faster, more flexible, tailored solutions.
Private credit offers several advantages, including the potential for attractive income, risk-adjusted returns with greater risk mitigation, and less mark-to-market volatility.
Private credit offers several advantages, including the potential for attractive income, risk-adjusted returns with greater risk mitigation, and less mark-to-market volatility.
Private Credit
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Infrastructure
Infrastructure provides the essential services underpinning the global economy, moving people, goods, commodities and data to where they are needed most. Infrastructure spans numerous sectors, including transportation, renewable power, utilities, midstream and data; with assets such as airports, wind farms and data centers.
Adding infrastructure to a portfolio has historically enhanced returns while mitigating risk and providing a source of diversification.
Adding infrastructure to a portfolio has historically enhanced returns while mitigating risk and providing a source of diversification.
Real Estate
Real estate investing extends beyond traditional direct property investments and encompasses various sectors including residential, commercial, and industrial properties.
Real estate is an alternative opportunity to access passive income, diversify portfolios, and utilize tax mitigation strategies that may potentially increase overall returns.
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Diversification does not guarantee a profit or protect against loss.
Please consult a tax professional for tax advice.