How Can I Use Alternative Investments?
Alternative investments offer the potential for a variety of benefits since they generate return in different ways. For instance, commodities can be used as a hedge against inflation, and private equity might make sense for investors who can wait to realize returns from its long-term performance potential. While alternative investments have different characteristics from each other, in general they rely less on markets and more on investment selection for returns, which can result in greater diversification for investors that include them in their portfolios.
Innovations in ways to access alternative investments give investors today more options than in the past. Alternative mutual funds and registered alternative funds offer greater transparency and easier access to capital when compared to traditional unregistered private funds. However, we believe traditional alternative vehicles still offer investors the widest range of investment opportunities and greatest return potential.
When selecting individual investments, it's important to think about how you want each to contribute to overall portfolio performance. This will help you to prioritize which specific attributes are most important for a given investment. For instance, are you looking to:
- Mitigate the effects of stock market volatility?
- Further diversify by adding investments that have lower correlation to traditional stock and bond markets?
- Access this capital in the near future or can it remain invested for a longer period of time in exchange for higher return potential?
- Hedge your portfolio against inflation or rising interest rates?
The choice of investments available to investors is growing, and with it, the scope to find greater diversification.
All markets have inefficiencies - identifying and taking advantage of these can benefit investors.
Is the era of ultra-loose monetary policy over? A long/short strategy is one tactic to help reduce the effects of rising rates.
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.
Incorporating alternative investments into a portfolio presents the opportunity for significant losses including in some cases, losses which exceed the principal amount invested. Also, some alternative investments have experienced periods of extreme volatility and in general, are not suitable for all investors.
Investors should consider the investment objectives, risks, charges and expenses of any fund carefully before investing. The funds' prospectuses and, if available, the summary prospectuses contain this and other information about the funds, and are available, along with information on other BlackRock funds by calling 800-882-0052. The prospectus and, if available, the summary prospectuses should be read carefully before investing.
Prepared by BlackRock Investments, LLC, member FINRA.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE