The spectrum of alternatives

Alternatives include a spectrum of assets, strategies and structures, each designed to deliver different benefits. Alternative investments strategies, while not guaranteed, may help meet specific objectives and complement a traditional portfolio allocation.

Alternatives complement traditional portfolios

Investment Objectives
Investment
types
Traditional
investments
Equities
Large, mid, small, growth, value,
 international, emerging markets
Alternative
investments
Capital
preservation
Growth
Income
An investing strategy that seeks to minimize volatility by profiting from long positions in stocks that are expected to appreciate in value and short positions in stocks that are expected to decline in value.Long/short equity
Venture capital aims to provide financing to promising start-up and early-stage companies in exchange for an equity ownership stake.Venture capital
High net worth individuals and institutions may invest in private equity funds, which purchase and grow private companies. Private equity funds can also provide financing to companies seeking to expand, enhance operational efficiencies and make capital structure improvements, usually in exchange for common equity.Private equity
Fixed income
Treasuries, investment grade, high yield, emerging market debt
Senior secured loans are the primary source of debt financing for private companies. These loans are typically “secured,” or backed by a company’s assets. They also typically have floating rates, which adjust with changes in market interest rates.Senior secured loans
With event-driven credit, an investment is made in the debt of companies experiencing a corporate event, such as an acquisition, merger or reorganization that may result in market price inefficiencies.Event-driven credit
Debt is typically labeled distressed when the issuing company may face difficulties meeting its financial obligations.Distressed debt
Real assets
REITs,
long-only commodity
For purposes of investment, real estate generally refers to commercial real estate. Institutional investors, such as endowments and pension funds, may own commercial real estate directly with the goal of achieving rental income. Smaller investors may access real estate through single manager or fund of funds investment vehicles.Real estate
Managed futures are investment funds managed by commodity trading advisors (CTAs) that trade futures on commodities, global currencies, interest rates, equities and energy.Managed futures
Investing in alternatives is different than investing in traditional investments such as stocks and bonds. Alternatives tend to be illiquid and highly specialized. When building a portfolio that includes alternative investments, investors and their financial advisors should first consider an individual’s financial objectives. Investment constraints such as risk tolerance, liquidity needs and investment time horizon should be determined.
Equities
Traditional
Large, mid, small, growth, value,
 international, emerging markets
Alternative Investments
Long/short equity
Capital preservation

Growth
Venture capital
Growth
Private equity
Growth
Fixed Income
Traditional
Treasuries, investment grade, high yield, emerging market debt
Alternative Investments
Senior secured loans
Capital preservation

Income
Event-driven capital
Capital preservation

Growth
Income
Distressed debt
Growth
Real assets
Traditional
REITs, Long-only commodity
Alternative Investments
Real Estate
Capital preservation

Managed futures
Growth
Income