Alternative investing involves trading in securities, assets, and investment opportunities that aren't available on the public market/stock exchange. As a core strategic building block, alternatives may bring diversification and long-term risk adjusted returns to the well-balanced portfolio of the future.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
Key takeaways
01.
Alternative investing
Alternative investments can be private assets such as private equity, private credit, infrastructure and private real estate, often referred to as private markets. Or they can be hedge funds – a high risk investment that uses complex strategies like short selling (betting against stocks), to maximise potential returns.
02.
Benefits of Alternatives
Alternative asset classes offer potential for higher returns and diversification from the stocks and bonds that dominate most investors’ portfolios. However, it’s important to consider the trade-offs: higher risk, lower liquidity (hard to sell quickly for cash), and longer investment commitment.
03.
Choosing a portfolio
An investment portfolio that works well for one person may not be the best fit for another. As with any investment decision, it's important to first understand what you're trying to achieve and then identify the best portfolio to get there.
Diversification and asset allocation may not fully protect you from market risk.
Why BlackRock for alternatives?
Broad investment opportunities
We have relationships with thousands of companies across regions, asset classes, and industries to consistently find high-quality investments.
A whole portfolio view
We manage both private and public assets, providing our clients access to broader investment opportunities, and potentially better risk management across a whole portfolio.
Global reach and investment expertise
Insights from 21,000+ employees in 38 countries & 3,100+ investment professionals specialised across all asset classes.1
What are private markets?
Private markets are large, more complex, and less liquid than public stocks and bonds, as they are not publicly traded and easily sold for cash without losing value.2 Private markets may offer differentiated opportunities and potential additional sources of risk and return for an overall portfolio.
Diversification and asset allocation may not fully protect you from market risk.
What are the benefits associated with alternatives?
It’s important to understand both the risks and benefits that come with alternatives investing. Here’s a few which investors care about right now:
Potential diversification
Alternative investments often don’t carry the same risks as traditional public equities and bonds, meaning alternatives may help spread the drivers of risk in a portfolio.
Income
Alternatives can be less sensitive to movements in global markets and seek stable income across a wide range of market cycles. Potentially leading to higher overall returns.
Inflation mitigation
Alternatives include real assets. They are physical assets like real estate or infrastructure. These tend to increase in value over time in line with, or outpacing inflation.
Higher potential returns
In return for investing in illiquid assets such as private markets, investors receive an “illiquidity premium”. This can be in the form of greater income, or capital gains.
Alternatives overview
Alternative investments are assets that don’t fall into traditional categories such as stocks, bonds, or cash (highly liquid assets). They provide a counterweight for portfolio diversification – and some real assets, like real estate and infrastructure, may effectively hedge against inflation.
1BlackRock, as of 31 March 2025.
2Capital IQ, BlackRock as of 31 December 2023. Represents the number of global companies with annual revenues greater than $100 million. 88% are private companies and 12% are public companies.
BlackRock
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