Strategy Insights Second Quarter

In this quarter’s Strategy Insights, we pull back the proverbial curtain on the vast world of private investments, still often referred to as “alternatives.” For some investors, private investments might seem as overwhelming as Dorothy and Toto entering Munchkinland for the first time — confusion around investment lock-up periods, new terminology, underlying investment structures and more. Indeed, the landscape of private investments may appear far different from traditional public markets, but at its core, private markets serve the same purpose: to enhance investor return potential. We review the distinct types of private investment asset classes, what sets them apart from their public market counterparts and reasons they might merit inclusion in investment portfolios.

When carefully selected, we believe private investments have the potential to add incremental return and improve the overall risk profile of a portfolio through diversification. At a time when the expected returns of public equity asset classes have volatility assumptions above historical norms, and fixed income asset classes have return projections below theirs, we believe the potential role of private investments in portfolios has become increasingly important to consider.