Alternatives can assist investors towards achieving their objectives as part of a carefully constructed and diversified portfolio, while taking each investor’s risk tolerance and goals into consideration.
DiversificationAlternatives typically have lower correlation to the equity and bond markets, even if the underlying assets within the alternative portfolio may appear similar. This low correlation may provide stronger performance when stocks or bonds are in decline, and more stability in periods of market volatility. Diversification also reduces the risks derived from over-exposure to a single asset or asset class, which in turn can lead to enhanced returns.
GrowthInvestment managers construct their funds with the aim of generating returns superior to the markets.
IncomeSome alternatives may offer daily liquidity, monthly distributions or in some cases, capital will be locked up over a certain period of time. The type of investment suitable for the investor will depend on their income requirements and financial goals; for instance, do you have monthly mortgage payments or are you saving for retirement?