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Is Goldilocks Awake? Time To Consider Exposure To Alternatives

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Russell Investments

Note: This is the third in a three-part series: Running with the bulls without getting trampled, focusing on how to potentially get returns in today's market while protecting against the downside. Part 1 can be viewed here, and part 2 can be viewed here.

2017 was a Goldilocks year. Market conditions seemed just right: the global economy was generally steady, interest rates remained low and many equity markets had high returns and low volatility. But 2018 has given us less sanguine conditions. Global economic growth is still solid, but slower. Interest rates remain low, but are rising. And equity markets have relatively higher volatility and lower returns. We're not suggesting the bears have come home to find Goldilocks asleep, but we believe the challenges facing investors make it an ideal time to consider exposure to alternatives.

In a market environment of increased risk, why should investors consider alternatives?

Alts are a key part of a multi-asset approach-because, as part of a total portfolio, we believe they create a greater likelihood of meeting the overall objectives. Multi-asset includes traditional assets such as stocks and bonds, but also features alternative investment strategies that offer opportunities for additional sources of alpha. Importantly, alts opportunities have had historically relatively low correlation to public equity markets.

Alternative investments include a broad range of potential assets, each with its own risk, return and diversification characteristics distinct from each other and from traditional asset classes. Alternative investments include real assets such as real estate, infrastructure and natural resources. These can be accessed through listed or private vehicles. Other types of alternative investments include private debt, private equity, venture capital and hedge funds. The investments within each strategy have distinct advantages and risks, which can make investing in them complex and may require specialized expertise.

Though alternative investments

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Russell Investments is a leading global investment solutions firm with $326.9 billion in assets under management (as of 3/31/2021) and $2.8 trillion in assets under advisement (as of 12/31/2020) for clients in 32 countries, The firm provides a wide range of investment capabilities to institutional investors, financial intermediaries, and individual investors around the world. Building on an 85-year legacy of continuous innovation to deliver exceptional value to clients, Russell Investments works every day to improve people’s financial security. Headquartered in Seattle, Washington, Russell Investments has offices in 19 cities around the world, including in New York, London, Tokyo, and Shanghai.  Russell Investments’ ownership is composed of a majority stake held by funds managed by TA Associates with minority stakes held by funds managed by Reverence Capital Partners, Russell Investments' management and Hamilton Lane Incorporated.Frank Russell Company is the owner of the Russell trademarks contained in this material and all trademark rights related to the Russell trademarks, which the members of the Russell Investments group of companies are permitted to use under license from Frank Russell Company. The members of the Russell Investments group of companies are not affiliated in any manner with Frank Russell Company or any entity operating under the “FTSE RUSSELL” brand.

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