As part of a thoughtfully constructed portfolio, alternative investments have the potential to provide above average returns and could even reduce your overall portfolio risk because they are less likely to move in tandem with stocks and bonds.
What is a "Hedge Fund"?
Simply put, hedge funds are investments that have broad flexibility in the types of trading strategies they may employ to pursue their investment objectives, and no two are exactly alike. In addition to trading in public equity and fixed income markets, hedge fund managers may also invest in "non-traditional" markets — for instance foreign exchange, commodities and derivatives markets — and may employ specialized trading techniques.
This means that investment manager selection is of paramount importance since hedge fund returns are more reliant on individual manager skill than traditional portfolios that attribute a large part of their performance to broad market trends. Although asset allocation and diversification strategies do not ensure profit, it is important to seek diversification and avoid concentration of portfolio risk.
Making the Decision to Invest in Hedge Funds
In general, hedge fund investing is through:
- Single Manager / Single Strategy Funds: Can offer individual strategies to complement your core allocation to alternative investments
- Funds of Hedge Funds: Can offer an efficient way to achieve broader, cost-effective diversification across multiple hedge funds
Alternative investments such as hedge funds may provide an effective means of diversification and an attractive complement to traditional stock and bond investments in individual investor portfolios. Please consult with your financial professional regarding BlackRock products and services that may fit your overall asset allocation plan and risk profile.
Why Choose BlackRock?
With $104 billion of assets under management in alternative investments,* BlackRock is a preeminent provider of diverse alternative investments strategies globally, including hedge funds, private equity, real estate, commodities, currencies, infrastructure, renewable energy and other special opportunities. Please consult with your financial professional regarding BlackRock products and services that are available to you and that fit your overall asset allocation plan and risk profile.
* As of September 30, 2013.
Instant hedge fund manager and strategy diversification.
The information on this Web site is intended for U.S. residents only. The information provided does not constitute a solicitation of an offer to buy, or an offer to sell securities in any jurisdiction to any person to whom it is not lawful to make such an offer.
Utilizing alternative investments involves substantial risk and presents the opportunity for significant losses including in some cases, losses which exceed the principal amount invested. Alternative investments have experienced periods of extreme volatility and in general, are not suitable for all investors.
Please consider the investment objectives, risks, charges and expenses of each fund before investing. For mutual funds and registered alternatives funds, the fund's prospectus and, if available, the summary prospectus contain this and other information about the fund. You can obtain a prospectus and, if available a summary prospectus by calling 800-882-0052 or from your financial professional. To obtain information about privately offered funds, please contact your financial professional to obtain fund offering documents. The prospectus or offering documents should be read carefully before investing.
Hedge funds may not be suitable for all investors and often engage in speculative investment practices which increase investment risk; are highly illiquid; are not required to provide periodic prices or valuation; may not be subject to the same regulatory requirements as mutual funds; and often employ complex tax structures.