Many alternative investment strategies have the ability to generate positive returns independent of the movements of the equity markets. The variety of alternative investment styles, many uncorrelated with each other, provides investors with a wide choice of strategies to meet their investment objectives. The inclusion of alternative investments, such as hedge funds, managed futures/commodity pools, and private equity, to achieve portfolio diversification may reduce overall risk and volatility and increase return. Adding alternative investments to a balanced investment portfolio provides portfolio diversification not otherwise available through traditional investments.
Hedge fund managers use skill-based trading strategies and have are few limitations on the markets, instruments and strategies they can employ. Many hedge fund strategies attempt to hedge against downturns in the markets being traded. They can use short selling, leverage, derivatives such as puts, calls, options, futures, etc. In addition to having fee structures that reward managers for performance, managers typically have a significant portion of their net worth invested in their funds along with their investors. Research by our affiliate, Greenwich Alternative Investments, and other experts has shown that the addition of hedge funds to a traditional portfolio improves the reward-risk characteristics of the portfolio. Many definitions of hedge funds include managed futures, which provide exposure to international financial and non-financial asset sectors using global forwards, futures and options markets. Through their ability to take both long and short investment positions, they gain exposure to risk and return patterns not easily accessible with investments in traditional long-only stock and bond portfolios and, thereby can add diversification to an overall investment portfolio.
Private equity opportunities encompass a variety of investment strategies including buyout funds, mezzanine funds, restructuring funds, real estate, and venture capital funds. These managers attempt to generate excess returns by investing in companies or properties on privately negotiated terms where illiquidity and relatively long lockups favor longer investment time horizons.
Venture capital is a type of private equity capital that provides financing for new, growing, or struggling businesses that are believed to offer significant potential to grow substantially and reward investors accordingly. Venture capital investments are generally higher-risk, long-term investments offering the potential for above-average returns. Historically, venture capital has displayed low correlations with other asset classes, resulting in diversification benefits.
Partner Capital Group assists institutions in locating sources of capital for specialized financing needs. Sectors in which Partner Capital has assisted institutions include real estate and life settlements. Financings may take the form of senior secured debt, junior secured debt, equity, mezzanine financing or any combination thereof. We are committed to pursuing the development of new and creative services for our clients. Financing is always custom-tailored to meet each of our customers’ special needs.