The Power of Alternatives

A traditional stock & bond investment approach is challenged in this era of ultra-low interest rates and heightened volatility. We believe investors can benefit by adding alternatives to their portfolios.

Alternative Investment Strategies

Alternative Investment Objectives

1 Enhance Returns

2 Generate Income

3 Reduce Risk

4 Access Innovation

A traditional stock & bond investment approach is challenged in this era of ultra-low interest rates and heightened volatility. We believe investors can benefit by adding alternatives to their portfolios.

Alternative Investment Objectives

Alternative Investment Objectives

1 Enhance Returns

2 Generate Income

3 Reduce Risk

4 Access Innovation

Higher Return vs. Public Markets

Alternative investments such as private equity have historically outperformed public market counterparts. Private Equity managers seek to add value through three key attributes: i) buying deals at cheaper purchase price multiples, ii) focusing on the long-term, not near-term earnings and iii) unlocking value through a hands-on management techniques.

Public vs. Private Equity

Trailing 15-Year Return

Returns are from Oct 2005 to Sep 2020. U.S.Equities represented by Russell 3000. U.S. Private Equity is as reported by Cambridge Associates and includes 70% buyouts, 15% venture capital, and 15% growth equity. Private equity returns are net of underlying manager fee.

Greater Yield in Alternative Lending

Fixed income seeks to provide investors safety and steady income in periods of uncertainty. In today’s ultra-low yield environment, investors often look beyond traditional means to pursue these goals. Alternative credit strategies, such as direct lending, have emerged as attractive investment options. The changing regulatory environment in the post-financial crisis-era has given rise to many forms of non-bank lending, often offering a healthy yield premium.

Current Yield in Public and Private Credit

Reflects current yields as of 9/30/2020. U.S. Treasury is the Barclays U.S. Treasury Index (duration: 7.2 yrs), Investment Grade Corporate is the Barclays U.S. Corporate Investment Grade Index, High Yield is the Barclays U.S. High Yield Corporate Bond Index, and Direct Lending is the Cliffwater Direct Lending – Senior Only Index.

Reducing Portfolio Volatility

Alternative investments can provide portfolio diversification. Independent sources of return with low correlations to traditional fixed income and public equity markets may help reduce overall portfolio volatility and may help protect your portfolio in times of stress.

“60/40 Portfolio” constitutes a 60% MSCI ACWI / 40% Barclays Aggregate portfolio. Multi-Asset Portfolio constitutes a portfolio allocated 60% to capital appreciation strategies diversified across public equities, hedge equity, private equity and private real assets and 40% to capital preservation strategies diversified across core fixed income, multi-sector credit, absolute return, and private credit. Simulated historical statistics are based on a combination of asset class benchmark and manager returns during the Dot-Com Bubble Drawdown (April 2000 – September 2002) and the Global Financial Crisis Drawdown (November 2007 – February 2009), and rebalanced monthly. Results are hypothetical and do no represent actual trading.

Accessing Today’s Innovation

Founders and business owners are increasingly choosing private over public capital to fuel their growth. Many of the most important parts of today’s economy cannot be accessed through public markets. More value in today’s disruptive and innovative companies is accruing to their private investors prior to going public.

Enterprise Value at Initial Public Offering

Source:Pitchbook