A Fidelity panel of alternative investment professionals share their knowledge on opportunities and risks in nontraditional asset classes within today's changing macroeconomic backdrop.
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Rising interest rates, higher inflation, global economic uncertainty, and heightened
market volatility have transformed the investment landscape, creating potential
opportunities for advisors and institutional investors considering alternative strategies.
But alternative markets encompass many complexities, requiring specialized
investment knowledge to navigate them successfully. A recent panel of Fidelity
alternative investment professionals shared their insight about current conditions
across private equity, private real estate, direct lending, and liquid alternatives.
Private equity continues to provide a key source of capital for business owners
and portfolio managers, while headwinds in the macro landscape have created
potential opportunities with lower valuations.
In private real estate, the shift in interest rates has led to materially lower activity,
but with significant capital on the sidelines due to dislocation or volatility, active
investors can take advantage of correcting values.
Given growth of direct lending and the unique potential benefits of equity-like
returns, floating rates, and lower volatility, the risk-return profile for the asset class
Some liquid alternative strategies are well-positioned to benefit from higher
interest rates, and with low correlation to equities and bonds, may offer an
attractive option for investors.
*Diversification does not ensure a profit or guarantee against a loss
Alternative investment strategies may not be suitable for all investors and are not intended to be a complete investment program. Alternatives may be relatively illiquid; it may be difficult to determine the current market value of the asset; and there may be limited historical risk and return data. Costs of purchase and sale may be relatively high. A high degree of investment analysis may be required before investing.
Past performance is no guarantee of future results.
Information provided in, and presentation of, this document are for informational and educational purposes only and are not a recommendation to take any particular action, or any action at all, nor an offer or solicitation to buy or sell any securities or services presented. It is not investment advice. Fidelity does not provide legal or tax advice.
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