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The authors found that, concurrent with the rapidly growing index investment in commodity markets since the early 2000s, prices of non-energy commodity futures in the United States have become increasingly correlated with oil prices; this trend has been significantly more pronounced for commodities in two popular commodity indices. This finding refiects the financialization of the commodity markets and helps explain the large increase in the price volatility of non-energy commodities around 2008.

This article explores the evolution and increasing significance of alternative investments--such as private equity, hedge funds, real estate, and private credit--and their integration into traditional portfolio structures. It examines the historical context of alternative assets, which date back centuries, and the post-World War II shifts that catalyzed their formalization. The analysis outlines the unique attributes of each major alternative investment class and their benefits for portfolio diversification, risk management, and yield enhancement. A focal point is the role of alternative assets in modern portfolio theory, particularly as complements to the traditional 60/40 stock-bond allocation. With notable investment examples like the Yale Endowment and new allocation models, this article highlights alternative investments' potential to stabilize and enhance returns amid market volatility. Concluding with the potential benefits and challenges, it emphasizes the role of liquidity, due diligence, and strategic selection in leveraging alternatives effectively within diversified portfolios. Keywords alternative investments, Alpha, 60/40 portfolio, private equity, private credit, hedge fund, real estate

We analyze the determinants of buyout funds' investment decisions. We argue that when there is imperfect competition for private equity funds, the timing of funds' investment decisions, their risktaking behavior, and their subsequent returns depend on changes in the demand for private equity, conditions in the credit market, and fund managers' ability to influence perceptions of their talent. We investigate these hypotheses using a proprietary dataset of 207 U.S. buyout funds that invested in 1,957 buyout targets over a 30-year period. Our dataset contains precisely dated cash inflows and outflows in every portfolio company, links every buyout target to an identifiable buyout fund, and is free from reporting and survivor biases. Thus, we are able to characterize every buyout fund's precise investment choices. Our findings are as follows. First, established funds accelerate their investment flows and earn higher returns when investment opportunities improve, competition for deal flow eases, and credit market conditions loosen. Second, the investment behavior of first-time funds is less sensitive to market conditions. Third, younger funds invest in riskier buyouts, in an effort to establish a track record. Finally, following periods of good performance, funds become more conservative, and this effect is stronger for first-time funds.

This study empirically assesses the viability of Bitcoin as an alternative investment asset within the Egyptian context from 2011 to 2023. We conduct a comparative analysis of Bitcoin’s risk-return characteristics against traditional Egyptian investment vehicles: the EGX30 stock index, physical Gold, and the USD/EGP exchange rate. Utilizing historical daily data sourced from Coinbase, Bloomberg, Yahoo Finance, and the Central Bank of Egypt, we employ standard financial metrics including annualized returns, volatility (standard deviation), and Sharpe ratios. Correlation analysis is performed to evaluate Bitcoin’s diversification potential. Furthermore, we examine asset performance during significant periods of socio-economic stress: the 2011 Egyptian Revolution, the COVID-19 pandemic (2019-2020), and the EGP devaluation period (2022-2023). Our findings reveal Bitcoin’s exceptionally high volatility ( σ ≈ 3.6 % daily) and potential for substantial returns, yet yielding a surprisingly negative cumulative return over the entire sample period. Gold demonstrated characteristic stability ( σ ≈ 1.0 % daily), while the EGX30 offered moderate growth amidst volatility ( σ ≈ 1.6 % daily). Correlation analysis suggests limited diversification benefits between Bitcoin and traditional assets during certain periods. Event analysis highlights varying asset reactions, with Gold often acting as a safe haven, while Bitcoin exhibited mixed behavior. While Bitcoin presents diversification potential, its extreme volatility, negative long-term cumulative return within this sample period, and the prevailing regulatory uncertainty in Egypt necessitate careful consideration for investors seeking alternative assets in a challenging macroeconomic environment characterized by inflation and currency depreciation.

Large institutional investors in the United States commonly diversify their portfolios among 8 to 12 asset classes. This approach typically involves using more than 100 investment managers at a cost of 1% to 2% of asset value annually. Sometimes referred to as the endowment model, the approach has failed to provide a diversification benefit and has proven to be a serious drag on performance. The vast majority of institutional investors would be better off managing their funds passively at next to no cost in the configuration that best accords with their risk tolerance and other preferences.

This study aims to investigate the pattern and level of environmental, social and governance (ESG) performance of listed companies in the alternative capital market of Thailand, and (2) to test for the relationship between ESG performance and corporate financial risk. The population and sample data are comprised of all the listed companies in the alternative capital market in Thailand, namely, the Market for Alternative Investment (MAI). Content analysis by scoring is used to quantify ESG performance in annual reports during the period 2017-2021, while corporate financial risk is measured by the ratio of debt on equity. Descriptive analysis, correlation matrix, and multiple regression are used to analyze the data of this study. The average scores of ESG performance are 6.182 out of 11 scores. In addition, there is an increase of ESG performance in annual reports of the listed companies from 5.540 to 7.180 scores during the period being studied. Finally, the result finds a negative relationship between ESG performance and corporate financial risk. The signaling theory demonstrates an explanation proposing that the increase of ESG performance can reduce corporate financial risk. Therefore, top-management and shareholders should pay attention to ESG responsibility because it can decrease risk as well as enhance sustainable development.

Private equity (PE) funds have generated returns that are about the same as those of public equity indexes since at least 2006. Large public pension funds received a net multiple of money (MoM) that sits within a narrow 1.51 to 1.54 range. The Big Four PE firms also delivered estimated net MoMs within a narrow 1.54 to 1.67 range. Three large data sets show average net MoMs across all PE funds at 1.55, 1.57, and 1.63. These net MoMs imply an 11% per annum return, which matches relevant public equity indexes, a result confirmed by public market equivalent (PME) calculations. Yet, the estimated total performance fee (carry) collected by these PE funds is estimated to be $230 billion, and most of it goes to a relatively small number of individuals. If all vintage years are included to 2015, the carry collected is $370 billion, with a performance similar to that of small-cap indexes but higher than that of large-cap stock indexes. The number of PE multibillionaires rose from three in 2005 to 22 in 2020. Rebuttals from the Big Four and the main industry lobby body are provided and discussed. TOPICS: Private equity, performance measurement, statistical methods, quantitative methods, real assets/alternative investments/private equity Key Findings • Private equity funds have produced returns about the same as those of public equity indexes since at least 2006. • Yet, the estimated total performance fees collected by these PE funds are estimated at $230 billion, and most of that goes to a relatively small number of individuals. • These results clash with commonly and strongly held beliefs.

Hedge funds' extensive use of derivatives, short selling, and leverage and their dynamic trading strategies create significant nonnormalities in their return distributions. Hence, the traditional performance measures fail to provide an accurate characterization of the relative strength of hedge fund portfolios. This paper uses the utility-based nonparametric and parametric performance measures to determine which hedge fund strategies outperform the U.S. equity and/or bond markets. The results from the realized and simulated return distributions indicate that the long/short equity hedge and emerging markets hedge fund strategies outperform the U.S. equity market, and the long/short equity hedge, multistrategy, managed futures, and global macro hedge fund strategies dominate the U.S. Treasury market.

Hedge funds' extensive use of derivatives, short selling, and leverage and their dynamic trading strategies create significant nonnormalities in their return distributions. Hence, the traditional performance measures fail to provide an accurate characterization of the relative strength of hedge fund portfolios. This paper uses the utility-based nonparametric and parametric performance measures to determine which hedge fund strategies outperform the U.S. equity and/or bond markets. The results from the realized and simulated return distributions indicate that the long/short equity hedge and emerging markets hedge fund strategies outperform the U.S. equity market, and the long/short equity hedge, multistrategy, managed futures, and global macro hedge fund strategies dominate the U.S. Treasury market. This paper was accepted by Wei Jiang, finance.