Major Investment Firms Making a Big Play in Alternative Investments

Both institutional and retail investors have been showing a growing interest in alternative investments for stronger returns and reduced volatility in their portfolios.

Over the past month, two major investment firms have made announcements showing their eagerness to capture a share of this growing market.

T. Rowe Price Group, Inc. (NASDAQ:TROW) recently demonstrated its strong commitment to expanding into the alternative investments market when it issued a press release announcing a definitive agreement to purchase Oak Hill Advisors, L.P., a leading alternative credit manager, in a $4.2 billion deal.

Oak Hill Advisors has approximately $52 billion in assets under management, which are made up of performing and distressed credit-related investments.

Global giant BlackRock, Inc. (NYSE:BLK) has also made major moves recently to expand its alternative investments business. The company released its new Expected Return Analyzer tool to help advisors amplify their clients’ returns with alternative investments.

According to the company’s press release announcing the new tool, BlackRock believes that the allocation to private markets in wealth portfolios should increase from 5% today to 20% over the next several years.

Institutional investors aren’t the only ones making more room in their portfolios for alternative investments, though. A growing number of investment platforms are providing individual investors with access to a range of asset classes outside of traditional stocks and bonds.

Real Estate: Real estate values have surged throughout 2021 and, according to Green Street’s Commercial Property Price Index, commercial real estate values and sales volume broke new records in the second quarter of this year.

Retail investors have several options to invest in real estate besides going all in to purchase their own property. Several reputable investment platforms are now allowing individuals to participate in institutional-quality deals with low minimum investments.

See also: Best Real Estate Crowdfunding Platforms

Fine Art: According to the Citi Global Art Market chart, contemporary art has offered a 14% annual return between 1995 to 2020, versus a 9.5% annual return from the S&P 500.

While hedge funds have been enjoying high yields from this asset class for decades, a new investment platform is now giving retail investors the opportunity to invest in iconic paintings from artists like Andy Warhol and Jean-Michel Basquiat.

See also: Best Art Investments

Private Credit: Private investors have been taking a growing share of the lending market from banks and other traditional lending institutions. Private credit investments can provide stable income that can be much higher than what most bonds and dividend stocks can offer.

The average person can manage money more like a bank with platforms that offer the ability to invest in a variety of asset classes such as real estate and private companies.

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