Alternative investments have been around for almost as long as investors have been investing in stocks and bonds. They were originally marketed to those with a high tolerance for risk and the ability to absorb large losses — these were not investments for wealth preservation or a retirement portfolio. In recent years, however, the term “alternative” has evolved to simply mean anything besides stocks and bonds. Some alternatives, such as real estate, are now considered a mainstream investment. Others are getting close.
Infrastructure is a case in point. With a risk/return profile falling firmly between stocks and bonds, it is gaining the attention of investors who are not comfortable with the volatility of equities, but who need more than the low single-digit return found in today’s fixed-income environment.
“A priority for all managers is to protect investor capital from absolute losses and to protect against value erosion from inflation,” says Todd Briddel