AlternativesExperience, Discipline, Focused Solely on Investment Management
Alternative strategies go beyond traditional, long-only positions in stocks and bonds. What makes a strategy "alternative" may be the assets it owns or the methods by which it invests.
Invesco has a long history of managing alternative strategies, and we offer a wide variety of choices for all types of investors. Explore how alternative strategies can play a role in your portfolio.
|Bank Loans||What they are. Bank loans are privately arranged senior debt instruments that are structured with floating rates. |
Reasons to consider them. Bank loans' floating rates make them an attractive source of yield to consider in a rising rate environment. They also have historically low correlations to traditional bonds, making them a potential diversifier for a fixed income allocation.
|Commodities||What they are. Commodity strategies provide exposure to real assets such as precious metals, industrial metals, energy or agriculture. |
Reasons to consider them. Commodities have historically outperformed in inflationary environments. Also, they can add diversification benefits to portfolios due to their historically low correlations to both equities and bonds.
|Currency||What they are. Currency strategies take either a long or short position in a single foreign currency or a basket of other currencies. |
Reasons to consider them. Currencies can provide diversification to a portfolio. Currency returns have historically had low correlation to stock and bond returns, and may help mitigate portfolio volatility.
|Diversified Alternatives||What they are. Diversified alternatives strategies invest in a number of different types of nontraditional asset classes and strategies. |
Reasons to consider them. These strategies typically target equity-like returns with significantly lower volatility. They provide exposure to multiple alternatives in a single investment.
|Equity Market Neutral||What they are. Equity market neutral strategies use offsetting long and short stock positions in an attempt to limit non-stock-specific risk. |
Reasons to consider them. They seek to provide positive returns above cash, regardless of market environment, and typically with lower volatility than the broad market.
|Global Macro||What they are. Global macro strategies base their investment decisions on macro views of various markets around the world. They may take long and short positions within and across such asset classes as equities, fixed income and currencies. |
Reasons to consider them. These strategies seek to provide consistent returns in all market environments. They target equity-like returns with lower volatility.
|Hedged Equity||What they are. Hedged equity strategies invest in stocks and may use derivative instruments or other investment techniques in an effort to control volatility or protect against losses. |
Reasons to consider them. Hedged equity strategies seek to reduce an investor’s exposure to volatility while also enhancing returns.
|Infrastructure and MLPs||What they are. Infrastructure companies own or operate assets such as bridges, toll roads, water supplies, pipelines and others. Master limited partnerships (MLPs) are publicly traded partnerships that derive most of their cash flows from real estate, natural resources and commodities. |
Reasons to consider them. Infrastructure strategies can provide diversification as well as a stable income stream and natural hedge against inflation as revenue is adjusted. Because MLPs must distribute most of their cash on a quarterly basis, they may offer high income potential while diversifying equity portfolios.
|Long/Short Equity||What they are. These strategies typically take both long and short positions to benefit from rising stock prices on the long side and declining stock prices on the short side. |
Reasons to consider them. Long/short equity strategies seek to mitigate portfolio volatility and provide protection against downside risk. They can also provide diversification.
|Private Equity||What they are. Private equity strategies invest in companies that are not publicly quoted on a stock exchange. Investments in private companies aim to deliver long-term capital gains that are realized when the holding is sold or when the company goes public. |
Reasons to consider them. For investors who understand the long-term, illiquid nature of the asset class, private equity strategies offer the potential for above-average returns, low long-term correlations with other asset classes and lower volatility.
|Real Estate||What they are. These strategies invest in real estate properties through the purchase of equity and/or debt. Ownership may be direct and illiquid (e.g., the purchase an office building) or indirect and liquid (e.g., investing in securities such as real estate investment trusts). |
Reasons to consider them. Real estate can provide diversification to a portfolio, with low correlation to other major asset classes as well as global property markets that have relatively low correlations with each other. Real estate can offer yields that have low correlation to corporate and government bonds. This asset class may also offer inflation-hedging characteristics.
|Risk-Balanced||What they are. Also known as risk parity strategies, these portfolios are constructed so that each asset contributes a relatively equal amount of risk to the strategic allocation of the portfolio. These portfolios may also include a tactical overlay that allows managers to opportunistically adjust the strategic allocation. |
Reasons to consider them. This approach seeks to limit the effect that one underperforming asset may have on overall strategy performance. The goal is to mitigate portfolio volatility and protect against downside risk.
|Unconstrained Fixed Income||What they are. These strategies may seek returns in a variety of ways, including the creation of long/short exposures or the implementation of an unconstrained approach that allows the managers to pursue their best ideas across fixed income markets. |
Reasons to consider them. The goal of these strategies is to generate positive returns in any market, with lower risk than traditional fixed income strategies.
About Risk and Other Important Information
This information is provided for informational purposes only and is not to be construed as investment advice or a recommendation of a particular strategy or product. Nor should it be construed as an offer to buy or sell any financial instruments. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing. Not all strategies or vehicles are available to all invesors or on all platforms. Contact your Invesco representative for more information.