Alternative strategies, structures and sponsors

A common mistake is to treat alternative investments as a single asset class. Alternatives include a spectrum of asset strategies and fund structures. Each alternative is designed to deliver certain benefits and comes with its own specific type of risk. Investors should consider the investment strategy, fund structure and investment expertise of a manager before deciding which alternatives to use in their portfolios.

Alternative investing strategies

An introduction to alternative investing


Commercial real estate debt

Offering a differentiated way to invest in real estate and an alternative source of income and diversification

Middle market lending

Generating incomeAn investment strategy that seeks to provide a steady stream of current income, or yield, over time. through direct investments in private U.S. companies

Energy and energy infrastructure

Investing in private U.S. energy and energy infrastructure companies with the goal of long-term income and growth

Finding opportunities beyond core fixed income

Investing in less liquid and more complex areas of the credit market may help investors generate an attractive level of income, reduce interest rate risk and manage portfolio volatility.

Private equity

Identifying, acquiring and operating private middle market companies with an objective of generating long-term shareholder value

Senior secured loans

Accessing the credit of private U.S. middle market companies

Structures

Understanding ways to invest in alternatives


Business development company (BDC)

An investment that facilitates the flow of capital to U.S. middle market companies

Interval funds

An interval fund is a type of closed-end fund that offers liquidity at stated intervals, typically quarterly, semiannually or annually.

Open-end and closed-end funds

Mutual funds and other pooled investments that fall under the Investment Company Act of 1940 and are regulated by the U.S. Securities and Exchange Commission

Sponsors

Considerations for selecting an alternative manager


The manager matters

The importance of experience and expertise

Best practices

How a manager aligns its interests with its investors

The role of an investment adviser and sub-adviser

Combining the investment expertise of an investment adviser and sub-adviser can provide a dual layer of expertise and oversight