Our research indicates that using some forms of alternative investment can improve longer-term returns in well-diversified portfolios. Their use can enhance returns or decrease risk, depending on the specific type of alternative investment employed, and the other holdings that make up the client’s overall portfolio mix.
Alternative investments such as private equity or venture capital, hedge funds, managed futures, cryptocurrencies, commodities, and derivatives contracts are not suitable for all investors, but the common denominator among them is their profits are typically driven by the skill of the manager rather than general asset-class return. However, as all managers are not uniformly talented or capable, the results have shown that in hedge funds, for example, the difference between the best and worst performers is much more pronounced than in the equity investing arena.
For those suited to alternative investments, the choice of manager and sufficient diversification is central to success.
The use of alternative investments should be carefully thought over as far as the alignment with your overall personal investment strategy is concerned, and should be discussed with your Account Manager in detail before any decision to invest is taken.
Alternative investment solutions and strategies can be appealing to a variety of risk-and-return objectives, incorporating multiple asset classes, such as equities, fixed income, currencies, multi-manager, opportunistic, and private capital strategies. While some are generally available, many are available solely to qualified investors.
For more information, please contact VyoGroup Wealth Management