Demystifying the Alternative Investing Landscape

Key Insights

• 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.