Alternative asset classes + strategies
Explore the broad universe of investment options to help meet your financial goals
Types of alternatives
Commercial real estate debt
Commercial real estate (CRE) debt refers to the mortgages of CRE properties. CRE debt has historically provided investors with a differentiated source of income and return with lower volatility than many traditional fixed income asset classes.
Liquid alternatives refer to daily liquid open-end funds, such as mutual funds and exchange-traded funds (ETFs), which invest across a broad range of alternative investment strategies.
Private equity involves investing in private companies that are not publicly traded. Private equity firms use investors’ capital to acquire companies, improve operations, and sell them for a profit. Private equity investments may offer high potential returns, but are often illiquid and require a long-term investment horizon.
Real assets refer to the physical structures, systems and technologies needed to support society. This can include everything from roads and bridges to airports to digital networks. Real asset investments may provide stable, long-term returns and are often seen as a way to benefit society while also generating profit.
Private credit is an asset class that involves lending to privately held companies, without the use of a bank or other traditional lender. Private credit funds lend to these companies in exchange for interest payments and the potential for capital appreciation. Private credit investments may offer higher yields than traditional fixed income investments.
Bitcoin is the world’s first technology that provides an open-source monetary system for storing and transmitting an asset of value whose underlying code is entirely open to the public. It is an asset that is traditionally uncorrelated to both stocks and bonds and may provide opportunities for diversification and growth.
Investing in alternatives is different than investing in traditional investments such as stocks and bonds. Alternatives tend to be illiquid and highly specialized. In the context of alternative investments, higher returns may be accompanied by increased risk and, like any investment, the possibility of an investment loss. Investments made in alternatives may be less liquid and harder to value than investments made in large, publicly traded corporations. When building a portfolio that includes alternative investments, financial professionals and their investors should first consider an individual’s financial objectives. Investment constraints such as risk tolerance, liquidity needs and investment time horizon should be determined.
A deeper look
The tools you need, within your reach
The largest impediment to more productive client conversations about alternatives is likely a knowledge gap. Investors may be hesitant to expand into alternatives due to their unfamiliarity with, and lack of exposure to alternative investment strategies.
FS Investments provides financial professionals and individual investors with the proper tools to feel comfortable answering and asking questions surrounding alternative investments. With better understanding only comes better conversations and with greater transparency comes expansion, or democratization, of what’s further possible in investing.