Look beyond traditional fixed income and equity markets to gain wider exposure that can add diversification to your portfolio, potentially hedge against market volatility, and reach your investment goals.
Alternative investments generally refer to investments that serve as alternatives to traditional asset classes like stocks, bonds, or cash. They could include investments such as private equity, private credit, hedge funds, and private real estate. Alternative investments are often referred to as a non-correlated asset class since their performance does not typically move with stock or bond markets.
Alternative investments typically aren’t tied to traditional fixed income and equity asset classes which lets you gain exposure to markets and investment strategies beyond traditional ones.
Lower volatility versus open markets
While highly speculative, alternative investments can be less susceptible to market swings than traditional fixed income and equity investment options.
Potentially give you higher returns
Although alternative investments could involve substantial risks over traditional fixed income and equity investments, they can have the potential for higher returns over the long-term than traditional investments.
Alternative investments are not suitable for all investors. They may only be offered to investors who meet specific suitability and best interest requirements, including minimum assets and net-worth standards.
Questions about alternative investments? We've got answers.
The potential to generate higher returns usually comes with higher risks and alternative investments are no different. They may not be suitable for all investors and involve special risks such as:
Alternative investments typically require longer investment commitment periods and there's generally no secondary trading market. Investors are subject to lengthy lock-up periods and generally cannot access their money during this time. Some alternative investment funds have quarterly redemption periods and require investors to submit redemption requests 60-days or more in advance. Other alternative investments, like private equity, typically have no redemption mechanism and investors must be willing and capable to commit capital for the life of the investment, which can be more than 10 years.
Generally speaking, the fees and expenses associated with alternative investments are often higher than those of traditional investments.
Alternative investments generally employ borrowing strategies (leveraging) to help enhance the chance of higher returns, which can also increase potential losses and higher risk for investors.
Due to their product structure, alternative investments afford investors limited visibility into the underlying investments and their valuations.
Investing in alternative investments can often impact federal, state, and local income tax returns for investors.
Alternative investment performance typically lags the performance reporting of traditional fixed income or equity investments like mutual funds or ETFs.
Alternative investments are highly speculative and there's no guarantee that investing in them will be successful, produce positive returns, or that the investments will achieve their intended investment goals.
Investing in alternative assets has historically been limited to financial institutions or high-net-worth individuals who can understand the risks associated with such investments. This is because most alternative investments are private offerings that are not traded on public markets. To learn more about how alternative investments can fit into your portfolio, talk with a financial advisor.
Our financial advisors can help with alternative investments
Alternative investments are different than traditional assets. They’re complex and generally carry greater risk, have higher investment minimums, higher fees and expenses, and are illiquid. Because of these unique attributes, it's important for you to work with an experienced financial advisor who understands alternative investments and who can evaluate how a particular alternative investment and its features fit your individual needs and objectives.
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