Demystifying the alternative investing landscape
A Fidelity panel of alternative investment professionals share their experience on opportunities and risks in nontraditional asset classes within today’s changing macroeconomic backdrop.
- 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 remains attractive.
- 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.
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Investing involves risk, including risk of 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.