Diversification and Low-Correlated Returns
As clients have become more educated and their needs more complex so, too, has their use of non-traditional assets in their portfolio allocations.
Alternative investments may include real estate, managed futures, commodities, hedge funds, private equity and others. Alternative assets, by themselves, may have higher risk profiles than traditional investments but when included in a well-diversified portfolio can have the effect of creating a more efficient investment than a portfolio solely comprised of traditional assets.
The potential benefits of alternative investments includes low-correlation to traditional investments, hence increased diversification, absolute returns and out performance.