Average return dispersion since 2001(top vs. bottom quartiles) 0% 5% 10% 15% 20% 25% Corporate bonds High yield bonds Large cap Mid cap Small cap Private equity Alternatives PERFORMANCE DIFFERENTIAL BETWEEN TOP- AND LOWER-TIER MANAGERS ACROSS STRATEGIES Sources: Fund categories filtered by Morningstar, as of June 30, 2016. Fund performance data from Bloomberg, as of June 30, 2016. The chart represents the difference in annualized returns over the 2001–2014 time period between the top (75th percentile) and bottom (25th percentile) quartile.

  • An alternative manager’s ability can have a more significant impact on returns when compared to traditional investment strategies.
  • As the above chart highlights, the average annual difference in returns between the top- and bottom-quartile traditional investment strategies, such as domestic investment grade bond and stock funds, is just 4.4%.1
  • Investing in alternative asset classes, however, relies less on publicly available data and more on a manager’s ability to analyze and underwrite its investments.
  • Perhaps as a result, the average annual difference in returns between the top- and bottom-quartile private equity managers is more than 16%. For alternative asset fund managers more broadly, the average annual dispersion is nearly 23%.1

1 Fund categories filtered by Morningstar, as of June 30, 2016. Fund performance data from Bloomberg, as of June 30, 2016. The chart represents the difference in annualized returns over the 2001 – 2014 time period between the top (75th percentile) and bottom (25th percentile) quartile.


The Alternative Thinking Week in Review market commentary and any accompanying data (“Market Commentary”) is for informational purposes only and shall not be considered an investment recommendation or promotion of FS Investments or any FS Investments fund. The Market Commentary is subject to change at any time based on market or other conditions, and FS Investments and FS Investment Solutions, LLC disclaim any responsibility to update such Market Commentary. The Market Commentary should not be relied on as investment advice, and because investment decisions for the FS Investments funds are based on numerous factors, may not be relied on as an indication of the investment intent of any FS Investments fund. None of FS Investments, its funds, FS Investment Solutions, LLC or their respective affiliates can be held responsible for any direct or incidental loss incurred as a result of any reliance on the Market Commentary or other opinions expressed therein. Any discussion of past performance should not be used as an indicator of future results.