Home Alternative Investments 4 Reasons Portfolios Can Benefit From Alternatives

4 Reasons Portfolios Can Benefit From Alternatives

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Strategy of diversified investment.

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Stocks and bonds have been the leaders of investment assets. While they still have their roles in portfolios, alternative investments, or alts, are making a name for themselves in this era of investing.

Alternative investments represent an ‘alternative’ way for

Alternative Investments

Traditional Investments

Absolute performance objective Relative performance objective
Performance dependent primarily on alternative investment manager’s skill Performance often dependent on market returns
May use leverage Limited or no leverage
Historically low to moderate correlation with public market indices Historically high correlation with public market indices
Typically, have reduced liquidity ranging from monthly to 12+ year lock-ups Typically offers daily liquidity
Generally higher fees, which may include performance fees No performance fees but may include fixed management fees for professional management
Usually, higher investment minimums Generally low investment amounts allowed
Less regulated Highly regulated
Only open to accredited investors and qualified purchasers Only open to accredited investors and qualified purchasers

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