Alternatives in a world of low yields 

As alternatives can behave differently to traditional assets, they can provide relatively attractive yield^# opportunities in the current ultra-low interest rate environment. 

Alternative sources of income

Source: BAML, Barclays, Bloomberg, Clarkson, Cliffwater, Drewry Maritime Consultants, Federal Reserve, FTSE, MSCI, NCREIF, FactSet, J.P. Morgan Asset Management. Yields are as of 31.03.2020, except Direct Lending, Global Infrastructure, Europe and Asia Pacific (APAC) Real Estate (31.12.2019). Global Transport: Levered yields for transport assets calculated as the difference between charter rates (rental income), operating expenses, debt amortisation and interest expenses, as a percentage of equity value. Yields for each of the sub-vessel types are calculated and respective weightings are applied to arrive at the current levered yields for Global Transportation; Preferreds: BAML Hybrid Preferred Securities; Direct Lending: Cliffwater Direct Lending Index; U.S. High Yield: Bloomberg US Aggregate Corporate High Yield; Global Infrastructure: MSCI Global Infrastructure Asset Index-Low Risk; U.S. Real Estate: NCREIF-ODCE Index; Global REITs: FTSE NAREIT Global REITs; International Equity: MSCI AC World ex-U.S.; US 10-year: 10-year US Treasury yield; US Equity: MSCI USA, Europe real estate references Europe core real estate: IPD Global Property Fund Index – Continental Europe. APAC real estate references APAC core real estate: IPD Global Property Fund Index – Asia-Pacific. Euro Govt. (7-10 year.): Bloomberg Barclays Euro Aggregate Government–Treasury (7-10 year). Data is based on availability as of 31.05.2020.
# Yield is not guaranteed.  Positive yield does not imply positive return.

Alternatives for uncorrelated returns

Generally, alternative investments have a low correlation to traditional assets such as equities and bonds and can offer diversification benefits to an overall portfolio. Increasingly, investors are looking to invest in strategies built to deliver uncorrelated returns to traditional asset classes. Even within alternatives, one asset can behave differently from another, providing additional diversification.

Quarterly returns of public and private market correlations

Source: MSCI, Bloomberg Barclays, NCREIF, Cliffwater, Burgiss, HFRI, J.P. Morgan Asset Management. RE – real estate. Global equities: MSCI AC World Index. Global Bonds: Bloomberg Barclays Global Aggregate Index. US Core Real Estate: NCREIF Property Index – Open End Diversified Core Equity component. Europe Core Real Estate: IPD Global Property Fund Index – Continental Europe. Asia Pacific (APAC) Core Real Estate: IPD Global Property Fund Index – Asia-Pacific. Global Core Infrastructure: MSCI Global Quarterly Infrastructure Asset Index (equal-weighted blend). US Direct Lending: Cliffwater Direct Lending Index. Global Private Equity: Cambridge Associates Global Private Equity Index. US Venture Capital: Cambridge Associates U.S. Venture Capital Index. Hedge fund indices include equity long/short, relative value, and global macro and are all from HFRI. All correlation coefficients are calculated based on quarterly total return data for the period 30.06.2008 – 30.09.2019. Returns are denominated in US dollars (USD). Data is based on availability as of 31.05.2020.
*Diversification does not guarantee investment return and does not eliminate the risk of loss.