Why should investors consider alternatives?

Explaining the basics of alternative strategies

Time to read: 2 min

Alternative investments (alts) were first embraced by institutions, and some people still view them as a complex solution for complex needs. However, a growing number of alternative strategies are now available via mutual funds. This allows alts to be used by everyday investors to help meet three of their most common investment objectives: building wealth, preserving wealth and providing income.

Why use alternatives?

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A new generation of nontraditional REIT opportunities

Infrastructure, data centers and timber REITs are growing in importance

Time to read: 4 min

When most investors think about traditional real estate investment trust (REIT) investment opportunities, they often think about the “four major food groups” of real estate — the retail, office, residential and industrial sectors. While these sectors continue to be a major component of REIT investing, they are increasingly being joined by nontraditional REIT sectors. Our growing reliance on technology and changing demographics are leading to new opportunities in three nontraditional REIT sectors: infrastructure, data centers and timber.

A changing picture of the REIT landscape

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Can alternative investments help in uncertain markets?

Explaining the basics of alternative strategies

Time to read: 2 min

For investors, it’s a whole new ballgame in 2018. Markets have become much more volatile and reactive to economic and political events, leaving investors increasingly concerned about what the future will bring for stocks and bonds. This has led to significant interest in investments that may be able to help cushion portfolios during times of market weakness. In my experience, alternative investments, due to their unique performance characteristics, can serve this purpose.

Given this recent increased interest

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Why manager selection is critical for alternative investors

The difference between the top and bottom performers can be significant

Time to read: 4 min

The recent (and long-awaited) return of market volatility has put alternatives back on the radar screen. But not only must investors familiarize themselves with the different types of alternatives that are available to them, they must also assess the skill level of the managers running these funds. Manager selection is a question that all investors face, of course, but it’s especially critical for investors in alternatives because these managers have greater freedom in their investment strategies. This freedom leads to a wide dispersion between the top-performing and below-average alt managers, and that dispersion is typically greater than what is found in traditional equity investments.

Comparing top and bottom managers

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What does the FERC ruling mean for MLP investing?

The recent ruling reverses a longstanding tax policy affecting MLPs’ interstate pipelines

Time to read: 2 min

On March 15, the Federal Energy Regulatory Commission (FERC) stated that it will no longer allow master limited partnerships (MLPs) to recover an income tax allowance when setting cost of service rates for their interstate natural gas and oil pipelines. This ruling reverses a longstanding (and long-debated) policy that was most recently affirmed by FERC in 2005. Although we expect the pipeline industry to appeal this ruling, the MLP market still dropped approximately 4.5% on March 15 in response to this announcement.1

To better understand the impact of the FERC ruling on the future of MLP investments, let’s explore the history of MLPs.

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Multi-alternative funds: Alts for one and one for alts

How multi-alternative funds may eliminate choice overload for investors

Time to read: 2 min

In my most recent blog, I described how choosing the appropriate alternative strategy (Real estate? Market neutral? Senior loans?) could become the biggest challenge for new investors in alternatives. This is one of the most common questions I receive here at Invesco, along with how to identify the best fund managers and how to select specific alt funds for a portfolio. This three-part dilemma speaks to the challenge of navigating the multi-faceted world of alternative investments.

I have written previously about the potential benefits that alternatives may deliver, be it boosting returns, reducing risk, providing diversification or delivering uniquely timed returns. However, it is much harder to select the specific investment that may best fulfill a given set of individual objectives. There are three reasons why:

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