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Fidelity Alternative Investment Solutions
Why offer an alternative investment solution?
Investors increasingly seek to incorporate alternative investments into portfolios for potential diversification, enhanced returns, and uncorrelated yield.
91% of investors have at least some interest in understanding how alternatives could help them meet their financial goals.
Source: Investment News, Reframing the Role of Alternatives September 2019
51% of investors will seek to execute alternative investment strategies through a financial advisor over the coming years.
Source: Investment News, Reframing the Role of Alternatives September 2019
Alternative investment AUM are expected to grow by a CAGR of 9.8% through 2025.
Source: Preqin, The Future of Alternative Investments 2025, December 2020
Common investment objectives for investors who incorporate alternative investments into their portfolios include:
- Reduced volatility
- Increased diversification
- Enhanced returns
- Yield generation
- Low correlation to equities
- Inflation protection
Fidelity offers a broad set of alternative investment solutions to meet your client needs
Fidelity's alternative investment solutions provide you with flexibility and choice to meet your client needs, along with increased transparency and operational efficiency.
Fidelity supports the custody and asset servicing for over 4,000 non-exchange traded alternative investments, in both retirement and non-retirement accounts. Fidelity's solutions offer you a competitive offering to diversify client exposures and consolidate client assets, while also increasing client confidence through "above the line" statement reporting.
Strategies available include:
- Alternative credit
- BDCs
- Hedge funds
- Managed futures
- Private equity
- Real-estate & non-traded REITs
Flexibility to invest how you choose for your client, while providing you tools and resources to support you through the investment process
Fidelity's alternative investment program offers three solutions designed to provide you with flexibility, while also offering additional value-added benefits. Alternative investment products available through Fidelity Institutional include both third-party funds, as well as funds sponsored by Fidelity Institutional Asset Management. Choose from over 4,000 options, including fee and no-fee solutions.
Alternative Investment Network®
Access to a growing list of alternative investments strategies with low minimums, many with 1099 tax-reporting — providing you with more options for a broader group of your clients. Strategies available include hedge funds, private credit, private equity, and real estate. Funds participating in the Alternative Investment Network are available with no-transaction fee or annual custody fees.
Strategic Alliances
Access institutional quality alternative investment managers, at lower investment minimums, along with investment and operational due diligence through Fidelity's alliances with CAIS, Goldman Sachs Asset Management, and iCapital Network. These providers may also offer you education, thought leadership and portfolio construction support, to help you incorporate alternative strategies into your client portfolios. Strategies offered through these partnership programs are available for reduced fees.1
Core Custody Solution
Fidelity's open-architecture core custody solution is designed to be a flexible solution for clients who have identified alternative investments on their own and wish to have the asset custodied at Fidelity. Fidelity will conduct an operational asset review process to determine acceptability prior to on-boarding new securities.2
Thought Leadership and Education developed by Fidelity
For financial intermediaries seeking to navigate the complex world of Alternative Investments. Fidelity Investments® is your trusted partner to deliver forward-thinking thought leadership. Through development of in-depth education and unbiased investment perspectives; FI will align with you to understand the alternatives landscape and identify solutions to help meet your clients' investment needs.
Simplified administration, allows you to spend more time advising your clients and eases the operational challenges of investing in alternatives
- Online order entry process for increased trade transparency, real-time order monitoring and efficient workflow
- Single-sign on capabilities with CAIS and iCapital Network
- Subscription, redemption, capital commitment, and capital call processing
- "Above the line" reporting on client statements
- Online search tools to determine product availability
- Consolidated 1099 tax reporting and 990-T filing for eligible securities
- Integration with DTCC's Alternative Investment Product (AIP) platform to streamline processing and reporting on participating securities
Concentrated stock solutions for high-net worth clients*
Many investors have built substantial wealth by investing in common stock. For some, they may own highly appreciated stock holdings concentrated in one single company. For those investors, holding a significant portion of their wealth in a single position can jeopardize wealth preservation. There are many ways these investors can attempt to diversify their wealth and mitigate the downside risk of owning a single stock. Fidelity clients have access to solutions to help diversify concentrated stock positions. An exchange fund attempts to provide the diversification benefits of a broad-based equity portfolio to holders of concentrated equity securities with relatively large unrealized capital appreciation, while seeking to minimize the current recognition of capital gains. Investing in an exchange fund may enable investors to better manage the tax implications of liquidating a position. Exchange funds can also serve investors as a valuable component of their estate planning strategy.
Fidelity Solutions
To learn more about exchange fund solutions managed by Fidelity, please contact your Fidelity representative.
Third-Party Solutions
For information on exchange fund solutions managed by Goldman Sachs Asset management or to determine if a security is eligible for acceptance, visit the Goldman Sachs Asset Management website.
*Prior to an investment, please consult the fund's official Private Placement Memorandum and marketing materials for additional information.
- Alternative investments are investment products other than the traditional investments of stocks, bond, mutual funds, or ETFs. Examples of alternative investments are limited partnerships, limited liability companies, hedge funds, private equity, private debt, commodities, real estate, and promissory notes. Some of the risks associated with alternative investments are: Alternative investments maybe relatively illiquid. It may be difficult to determine the current market value of the asset. There may be limited historical risk and return data. A high degree of investment analysis maybe required before buying. Costs of purchase and sale may be relatively high.
- 1. Strategies must have a servicing fee in place with Fidelity to be eligible for reduced fees. The annual custody fee is waived for participating funds. Please consult with the fund sponsor or Fidelity prior to investing to determine if a specific security is eligible for reduced fees.
- 2. Fund sponsors whose products are made available must execute a custody agreement with Fidelity prior to securities being made available for investment.
- To be eligible to invest in a Private Placement a client must have a preexisting relationship with Fidelity and must be a Qualified Purchaser or an Accredited Investor.
- Third party marks are the property of their respective owners; all other marks are the property of FMR LLC. Third parties referenced herein are independent companies and are not affiliated with Fidelity Investments. Listing them does not suggest a recommendation or endorsement by Fidelity Investments.