Alternative investments

Alternative investments are a collective term for investments outside the traditional investments in equities and debt securities.

The main asset types within alternative investments are hedge funds, private equity and real assets.

The desire to create more efficient portfolios with greater exchange between return and risk is driving the trend toward an increased proportion of alternative investments. The new asset classes have complementary return patterns and hence contribute to increase portfolio efficiency.

American universities foundations such as Yale and Harvard are leading the way by applying modern portfolio theory for the design of their asset allocation. Today, American universities have about 50% of the capital invested in alternative asset classes. 30 years ago the figure was lower than 5% and we believe that the rest of the world’s institutions will follow in their lead.