A well-diversified large investment portfolio typically would include stocks, bonds, and perhaps real estate as part or all of its investments. For a high net worth individual, corporation or foundation the addition of non-traditional alternative investments can enhance the risk-return profile of a well-diversified portfolio.
Alternative investments are a broad category that include investment in commodities (either directly or through financial instruments), currencies, specialized trading methodologies, arbitrage, or other investments where a manager seeks to provide a profit for investors. Alternative Investment funds, typically limited partnerships or limited liability corporations are not registered with the SEC. Because of this unregistered and unregulated status, an investor must meet the definition of a sophisticated investor.
Sometimes called hedge funds, alternative investments can have limited liquidity and charge fees that include a 'participation' or percentage of profits paid to the manager.
That being said, alternative investments can provide attractive risk-return characteristics that can reduce the volatility of a portfolio and increase the total return. Many of these funds seek to profit in non-traditional areas of the market or utilizing trading strategies that gain as the market declines. These profits can be uncorrelated with a traditional portfolio providing returns when a traditional portfolio could be failing.
RSA has been known to guide investors with the selection of appropriate alternative investments that can enhance their investment returns. Our team will evaluate your current holdings and recommend a selection of funds for you.