Investors are facing what many describe as the “perfect storm” of difficult market conditions: inflation, rising interest rates, market volatility, recession fears, a disrupted bond market, a simmering global pandemic and geopolitical uncertainty. This has led many advisors and their clients to consider opportunities for diversification and strategies that may preserve capital, reduce correlation and help achieve portfolio objectives.
Alternative investments may produce sources of returns that are differentiated from that of equities or fixed income. In addition to potentially enhancing diversification, a strategic allocation to alternatives may improve the overall risk-return profile of a portfolio comprised solely of equities and fixed income. Some alternative strategies seek returns greater than those typically available in the public markets, others may seek to protect capital when the market is down, while others may seek attractive returns in all markets.
