
Alternative investments represent a strategic shift from traditional asset classes, encompassing private equity, real estate, commodities, and digital assets. These instruments are designed to provide diversification benefits by offering returns that are less correlated with public markets. Typically requiring higher capital and expertise, they cater to sophisticated investors seeking to optimize risk-adjusted returns and capitalize on unique market opportunities.
Specifications
Details
Asset Classes
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Benefits
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Risks
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Comparison Points
- Alternatives vs. Stocks: Lower correlation (0.2 vs. 1.0 for S&P 500) but higher illiquidity.
- Alternatives vs. Bonds: Potential for higher returns but increased volatility and complexity.
- Asset Allocation: Experts recommend 10-20% allocation to alternatives for balanced diversification.
Important Notes
Investors should conduct thorough due diligence and consider working with financial advisors. Performance varies widely; past returns do not guarantee future results. Based on CPP Investments Strategy insights.
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