Strategy and diversification: The value of alternative assets

Discover how alternative assets strengthen portfolios in uncertain times. 

The strategic role of alternative investments 

In an increasingly dynamic economic environment, relying solely on traditional stocks and bonds can leave portfolios more exposed to concentration risk and market sensitivity. Alternative assets open opportunities to diversify, hedge against inflation, and enhance long-term resilience. 

How each asset class contributes: 

• Private credit: Generates attractive income with floating rates that mitigate interest rate risk. 

• Private equity: Captures innovation and growth opportunities outside the public markets. 

• Real assets (Real Estate and Infrastructure): Provide stable cash flows, inflation protection, and long-term contracts. 

• Hedge funds: Reduce volatility and deliver returns with low correlation to traditional markets. 

Rather than simply seeking exceptional returns, the focus is on complementing and strengthening the portfolio with instruments that add true stability and diversification in challenging economic contexts. 

Market implications: 
Incorporating alternative investments into traditional stock and bond portfolios can help manage risk and enhance returns. 

Risk–Return Profile of a Traditional Portfolio Including Alternative Investments (Q1 1990 – Q3 2024) 

Source: JP Morgan