Why should I consider alternative investments?

 

A "60/40" allocation to stocks and bonds may no longer be enough to provide investors with the returns and diversification needed to achieve their long-term goals. Over the past 10 years most portfolios carried predominantly equity risk: a 60/40 portfolio moved in the same direction as the S&P 500 Index 99% of the time.1 When screened for correlation to other parts of a portfolio, alternative investments may help lower volatility, enhance returns and broaden diversification.

 


Market volatility can erode a portfolio's value

Alternative investments can help mitigate the effects of market volatility on a portfolio while providing attractive returns.

Increased correlation: A challenge to diversification

A "diversified" portfolio of stocks and bonds has been moving nearly in lock step with the stock market. Alternatives can potentially lower this correlation and dampen the effects of market volatility.