Alternatives Going Mainstream
Alternatives Going Mainstream
After many years in the spotlight, most investors have heard about “alternative investments.” But why are they the subject of so much attention, and why are they becoming part of the mainstream investment landscape?
Alternative investments (or “alts”) refer to any securities that are “alternative” to public market stocks, bonds, and cash. They have been popular with institutional investors over the past few decades because they’re often less volatile than public market securities and typically earn higher returns. In exchange for those benefits, alts come with somewhat different risks, including less liquidity.
To help individuals invest more like institutions, many asset managers now offer alternative funds. These funds have grown in popularity because of the potential returns and portfolio diversification they may provide, coupled with enhanced liquidity that individual investors want. See our last post on liquidity risks in common fund structures to learn more.
As J.P. Morgan Research notes: “Total assets under management (AUM) continue to expand and have surpassed $33 trillion to date...” This figure includes both institutional and individual investments, and clearly demonstrates how important alternatives have become.
Indeed, alternatives have gone mainstream.
There are many different alternative asset classes, each with distinct performance characteristics ranging from stability to growth. They include credit, real estate, natural resources, infrastructure, private equity, venture capital, and structured products.
Real estate credit is one sector known for its stability relative to other sectors, and we believe Arixa Capital is a good example. Our debt funds provide access to diversified portfolios of first-position loans backed by residential and multifamily investment projects. Despite the ongoing national housing shortage, banks have steadily pulled back from this space—a trend that only accelerated after the 2023 regional banking crisis. This dynamic has allowed Arixa to remain both diligent and highly selective in the loans we make, resulting in no principal loss to investors to date across our retail funds.
The strategy is delivering results, and institutional investors have taken notice. Over the past few years, Arixa has expanded its partnerships: launching a joint venture with Oaktree Capital Management, a loan sale partnership with another national asset manager, and multiple warehouse credit facilities. These partnerships have fueled record-breaking loan volume over the past 12 months, helping Arixa reach a new milestone: $6 billion in loan originations since inception.
With stable income generation, strong institutional partners, and a long track record of preserving investors’ capital, we believe Arixa’s funds offer a compelling addition to the mainstream investment toolkit.
Whether you’re managing your own portfolio or advising clients, consider how Arixa can enhance your allocation strategy.
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Connor Grosskopf, CFA Vice President, Investor Relations |
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