Alternative
CAPITAL AT RISK

What are alternative investments?

The myth, the legend, the fuel for your portfolio1

Broadly speaking, alternatives are investments in assets other than stocks, bonds and cash, or investments using strategies that go beyond traditional methods, such as long/short8 or arbitrage strategies.

In general, there are two main types of alternatives. The first type are vehicles that invest in non-traditional assets, such as infrastructure, real estate and private equity. The second type involve investment strategies that invest in traditional assets using non-traditional methods, such as short-selling and leverage.

Investments

What are the different types of alternative investments?

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Liquid alternatives4

Investments that aim to provide diversification and downside protection, available through more liquid vehicles such as mutual funds, UCITS5 and Cayman6, and ETFs7

  • A hedge fund is defined as a privately organized investment vehicle that uses its less regulated nature to generate investment opportunities that are substantially distinct from opportunities offered by traditional investment vehicles, which are subject to regulations such as those restricting their use of derivatives and leverage. Hedge fund strategies focus on idiosyncratic risk to generate absolute returns irrespective of the market environment.

  • While hedge funds strategies can be effective diversifiers and potential return enhancers, strategies can differ vastly from one another. Holding diversified exposures to multiple hedge funds strategies in the long term, whilst dynamically allocating to short-term opportunities that may present themselves in certain hedge fund strategies as we move across market cycles and regimes.

  • Discretionary and systematic approaches seeking to generate positive absolute returns through investments in a range of equity markets.

  • Strategies seeking to generate superior risk-adjusted returns by exploring a wide spectrum of transformative corporate events.

  • Relative value strategies seek to exploit temporary differences in prices of related securities.

  • Discretionary, dynamic long/short, multi-asset exposure in a daily liquidity absolute return structure.

  • Global multi-asset, long/short Style Advantage franchise offering, seeking attractive, diversified risk-adjusted returns with a low correlation to major equity and bond markets.

Illiquid alternatives

Investments that are traded less frequently and/or with low volume, making it harder to observe returns. Given the difficulties of selling and valuing illiquid investments, many investors demand a risk premium. While some investors may avoid illiquid investments at all costs, others specifically increase their allocation to illiquid investments in order to earn this risk premium.

  • The category of real assets focuses on investments in which the underlying assets involve direct ownership of nonfinancial assets. These assets are also known as physical assets that have value due to their substance and properties, such as real estate and infrastructure. Real estate focuses on land and improvements that are permanently affixed, like buildings. Infrastructure claims are on the income of toll roads, regulated utilities, ports, airports, and other real assets that are traditionally held and controlled by the public sector.

  • Private equity refers to equity and debt positions that, among other things, are not publicly traded. These investments primarily emerge from funding new ventures, known as venture capital; from the equity of leveraged buyouts (LBO) of existing businesses; from mezzanine financing of LBO’s or other venture; and from distressed debt resulting from the decline in the health of previously healthy firms. In private equity direct investments managers look to add value through operations.

  • Illiquid or non-core credit that offers a yield pickup over traditional investment grade credit due to illiquidity, credit worthiness or complexity. Cyclical and secular changes in credit markets drive investment opportunities. Private credit assets can provide investors diversification benefits, yield enhancement, and additional capital deployment opportunities relative to similar public assets.

Liquid offering
Hedge Funds represent a core pillar of BlackRock’s alternatives platform.
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Liquid offering
Illiquid offering
We combine top talent with access to company management and data as well as the technology to process it bringing significant depth and breadth to our research.
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Illiquid offering

Delivering outperformance with true partnership

BlackRock Alternative Investors’ 870+ dedicated professionals partner with BlackRock’s multidisciplinary teams and leverage extensive company-wide resources in an effort to deliver consistent returns over the long term.

Alts sites

Source: BlackRock. All dollar figures are in US dollars. Number of professionals is as of January 2020 and excludes contingent workers and interns. Client assets are as of January 2020 and include committed capital. Client assets include currencies and commodities. Alternative credit is reported in BlackRock Alternatives. Leveraged finance is not included in the alternative client assets figure.

Tomorrow’s alternatives platform

Setting new standards for alignment
Setting new standards for alignment
We deliver better value, from better structured deal terms to access to private markets in formats tailored to your needs.
Reaching best place opportunities
Reaching best place opportunities
We bring you the highest quality investments by drawing upon our unmatched global footprint, execution capabilities and position as a preferred partner.
Bringing transparency to alternatives
Bringing transparency to alternatives
We provide industry-leading insights to help you build better portfolios, using our proprietary technology and unique visibility across asset classes and geographies.

Global reach with local expertise

Our Alternatives Specialists group delivers strong and focused solutions to our clients’ investment needs, enabling them to maximize the outcome of their allocations.

The team based in Switzerland operates on a global scale and leverages local expertise to deliver the best outcomes for our clients.

Our team in Switzerland is here for you:

  • Nicolas Nussbaum
    Nicolas Nussbaum
  • Alex Widmer
    Alex Widmer
    Ersin Yorulmaz
    Ersin Yorulmaz
    Mascha
    Mascha Ankelmann
  • Robert Nef
    Robert Nef
    Nil
    Nil Koeppel
  • Felix Herter
    Felix Herter

1 BlackRock has not considered the suitability of this investment against your individual needs and risk tolerance. To ensure you understand whether our product is suitable, please read the [Key Investor Information Document / Prospectus].
2 The [Fund’s/Strategy’s] investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the [Fund/Strategy] may not be able to realise the investment at the latest market price or at a price considered fair.
3 Beta, used in capital asset pricing model (CAPM), is a measure of the volatility, or systematic risk, of a security or portfolio, in comparison to the market as a whole.
4 Reference to individual investments mentioned in this communication is for illustrative purposes only and should not be construed as investment advice or investment recommendation.
5 Undertakings for the Collective Investment in Transferable Securities.
6 A collective investment scheme domiciled in an offshore jurisdiction.
7 Exchange traded fund.

8 Discretionary and systematic approaches seeking to generate positive absolute returns through investments in a range of equity markets.