A traditional "60/40" allocation to stocks and bonds may no longer be enough to provide you with the returns and diversification needed to achieve your long-term goals. Since 1990, most portfolios carried predominantly equity risk: a 60/40 portfolio moved in the same direction as the S&P 500 Index 99% of the time1.

A look at various possible portfolio allocations using the classic "efficient frontier" curve, which shows the optimal portfolios for generating the highest returns for defined levels of risk, demonstrates the potential of alternatives. When selected for their low correlation to other parts of a portfolio, alternative investments may help lower volatility, enhance returns and broaden diversification.

The New Diversification: Open Your Eyes to Alternatives

Modern Portfolio Theory did not fail during the credit crisis — portfolio construction did. So where should you go from here?

Market Volatility Can Erode a Portfolio's Value

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

Diversification is Difficult When Correlations Are Rising

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.

1 BlackRock; Bloomberg; Informa Investment Solutions. Traditional 60/40 portfolio composed of 60% S&P 500 Index and 40% Barclays Aggregate Index, rebalanced annually. Past performance does not guarantee or indicate future results. It is not possible to invest directly in an index.

The information on this website 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. Also, some alternative investments have experienced periods of extreme volatility and in general, are not suitable for all investors.

Diversification and asset allocation may not protect against market risk or loss principal.

Please consider the investment objectives, risks, charges and expenses of each 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 * No Bank Guarantee * May Lose Value