To help institutions and advisors reap the potential benefits of alternatives, Fidelity has developed a framework for allocating to alternative investments. This framework is based on proprietary research that outlines suggested portfolio mixes based on liquidity needs.

Key Insights

• Institutions and advisors allocate to liquid and illiquid alternative investments for a variety of potential benefits including enhancing a portfolio’s returns, managing risk, or improving diversification
• As product and strategy innovation opens the door to broader usage of alternative investments in multi-asset class portfolios, investors of all types are increasingly seeking guidance on suggested allocation levels
• Fidelity has explored return, volatility, liquidity, and other variables for traditional and alternative asset classes to help develop a potential implementation framework for four investor personas: a retiree, a high-net-worth individual, an endowment and an investor with  high liquidity needs
• Institutions and advisors can consider these allocation ranges in portfolio construction decision-making for themselves or their clients. To view the full framework, which also addresses potential nuances, challenges, and opportunities in implementing alternatives, please download the report.

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