Our research suggests that well-diversified allocations to alternatives can improve long-term investment outcomes for many investors. They can boost returns or reduce risk, depending on the particular type of alternative and the other assets in the investor’s portfolio.
Alternatives such as hedge funds can help diversify market risks because their returns are driven primarily by manager skill, rather than asset-class return. But all managers are not created equal: historically, there has been much wider dispersion between the best and worst performers in the hedge-fund arena than among stock or bond funds. This makes skillful manager selection and broad diversification by manager and strategy critical for success.
Exposure to alternative investments should be considered in the context of your personal investment plan. Today our offerings include alternative solutions and strategies to suit a range of risk-and-return objectives, covering numerous asset classes, including equities, fixed income and currencies, multi-manager strategies, and opportunistic and private capital strategies. While some are widely available, most are available only to qualified purchasers. For information about these funds, please contact your Bernstein Advisor.
ALTERNATIVES: AN IMPORTANT PART OF THE EQUATION
- Past performance is not necessarily indicative of future results.
- *See ““A Word About Risk: Multi-Manager Hedge-Fund Portfolio” and “Our Asset-Allocation Recommendations for Alternative Investments” in “Important Information and Disclosures” in the Appendix. Benchmarks are used in this presentation for purposes of comparison, and the comparison should not be understood to mean there would necessarily be a correlation between a fund's or strategy's returns and any benchmark. An investor generally cannot invest in an index. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio. See “Index Descriptions” in the Appendix. *Stocks are diversified by geography and style and represented by 35% Russell 1000 Value Index, 35% Russell 1000 Growth Index, 25% MSCI EAFE Index, and 5% MSCI Emerging Markets Index; bonds are represented by the Lipper Short/Intermediate Municipal Debt Average; hedge funds by the HFRI Fund Weighted Composite Index. The allocation to hedge funds is based on Bernstein’s recommendations, highlighted in our research and available upon request. Hedge-fund recommendations incorporated here are intended for a specific investor with certain characteristics, and should not be construed to represent the appropriate allocation for every investor. Complete research conclusions are available in the publication An Alternative View, available upon request.**Percentages are based on the market values of the strategies in the total portfolio as of December 31, 2016; strategy classifications and primary trading strategies may differ from how others might classify underlying managers and may vary over time. .