THE CASE FOR ALTERNATIVES
Most investors are familiar with traditional investments where an investor will purchase a stock or bond on the expectation that the asset’s value will rise. Traditional managers are usually evaluated on relative performance; their performance is measured against a selected benchmark return, such as the S&P 500 or the rate on treasury bills. In a down market, traditional investors are rewarded for losing less than the benchmark or less than their competitors.
In alternative investing, managers seek to generate an absolute return, independent of the direction of the overall stock and bond markets. This is accomplished either through active hedging of stock and bond investments, by investing in carefully researched event-driven situations, or by investing in inefficient areas where experienced competition is limited. These investments include, among other things, distressed investments, private equity, venture capital, real estate and long/short equity and debt strategies.
Alternative investments have a low correlation to traditional market indices. Therefore, balancing investments in traditional asset classes with alternative investments can enhance returns, reduce volatility and provide diversification to an investor’s overall portfolio.
Angelo, Gordon focuses on a number of alternative investment strategies. These investments are structured in liquid and illiquid formats, depending on the liquidity of the underlying investments or the length of the investment cycle.
"As market opportunities change, Angelo, Gordon identifies and invests in new alternative investment areas which are complementary to our existing strategies."
- John M. Angelo