Durable Income Sources
Alternative Investments refer to all investments existing outside the scope of the three traditional investment classes: stocks, bonds and cash or cash equivalents. As such, alternatives are capable of employing an immensely broad range of markets and strategies historically unavailable through traditional equity or fixed income investments. Alternatives include real estate investment trusts, (REITs), business development companies (BDCs), open-end mutual funds, variable annuities, structured notes, hedge funds, and closed-end mutual funds. Each of these asset classes come with their own unique investment characteristics, yet share a potentially attractive risk-adjusted return profile and historically have enjoyed lower price volatility compared to the broader market. And while traditional investments heavily rely on the movement of capital markets to achieve the majority of their return, alternatives have the ability to draw from multiple sources of return which hold low correlations to the traded market. When combined with traditional portfolio allocations, alternative investments can play an integral role in the durable income investment approach - maximizing overall investment returns while simultaneously minimizing risk.
College endowments, the world's major financial institutions and high net worth investors have been taking advantage of a great range non-correlated of strategies available through alternatives for decades. And though these same strategies have only begun to be made available to average investors within the the last few years, their popularity and utility continue to grow exponentially.