Overview: Alternative Investing

Abstract

Alternative investment strategies have come to play an increasing role in investment portfolios, partly because of a promise of high returns and partly as a way to find refuge from the swings in fortune of the more traditional markets. Alternative investing has come to mean a great deal of things to many people, and the term has been used to cover everything from innovative investment strategies to special investment situations that did not work out. In some cases, alternative investing means any private investment, and in others, it means a potentially new type of asset exposure that lends substantial diversification to an existing portfolio. Alternative investing can also mean an entirely different way of structuring asset exposures so as to create a new distribution of expected performance outcomes. To some extent, alternative assets are in the eye of the beholder and simply represent a departure from a traditional way of investing. Fifteen years ago, real estate and international equities were alternative assets for most portfolios. The seminar from which this proceedings was developed was intended to give participants an understanding of the broad asset category termed alternative-an asset class of growing importance given concerns about u.s. equity market returns reverting to historical long-term levels. Various authors from this proceedings draw on their extensive experience to help investors understand this asset class and assess whether alternatives are appropriate given the investor's objectives and constraints. The authors' insights also help investors select among available alternative investment vehicles and strategies, implement an alternative investment program, and evaluate the success of such a program.