The investment landscape has changed. More-efficient markets make it harder for mutual fund managers to outperform broad indexes, while global stock and bond markets move in tandem more than they did in the past. In order to adapt to the changes, investors may need to look beyond traditional investment strategies to reach their goals.
For years, institutional investors and high net worth individuals have used alternative investments as a solution to the changing investment landscape. Alternatives include assets outside traditional stocks, bonds and cash, as well as investment strategies that aren’t limited to standard, long-only positions or a single investing style or asset class. When added to a portfolio, alternatives can improve diversification, reduce volatility and potentially provide higher returns.
What percentage of stocks, bonds and alternatives is right for you?
Use the sliders below to change the percentage of stocks, bonds and alternatives in your portfolio. As you adjust the slider, the dials calculate the risk and return of your overall portfolio. Also see how the changes affect your portfolio’s correlation to the stock market.
Risk measures are calculated versus the S&P 500 Index and are based on the monthly returns of the HFRI Index for the time period selected through the “Data as of” date listed above.
Correlation: A statistical measure of how two securities move in relation to each other. The correlation coefficient will vary from -1 to +1. A -1 indicates perfect negative correlation, and +1 indicates perfect positive correlation.
Standard Deviation (Risk): Standard Deviation measures the volatility of the Fund’s returns. Higher standard deviation represents higher volatility.
Barclays Capital U.S. Aggregate Bond Index (Bonds): An unmanaged, market value weighted index of investment-grade debt issues, including government, corporate, asset-backed and mortgage-backed securities, with maturities of more than 1 year. The returns of each index do not reflect the actual cost of investing in the instruments that comprise it. It is not possible to invest directly in an index.
HFRI Index (Equity Hedge Total) (Alternatives): Investment managers who maintain positions both long and short in primarily equity and equity derivative securities. It is not possible to invest directly in an index.
S&P 500 Total Return Index (Stocks): An index of a basket of 500 stocks designed to provide a broad snapshot of the overall U.S. equity market. The total return index series reflects both ordinary and special dividends. It is not possible to invest directly in an index.