Endnotes
- These asset types also carry risks different from traditional investments, please see the disclosures at the end of this document for an explanation of the risks associated with private assets.
- Sources: Harvard Business School Online, “What are Alternative Investments,” July 8, 2021. McKinsey & Company, “Private Markets Rally to New Heights: McKinsey Global Private Markets Review 2022,” March 2022.
- Source: Bloomberg as of 11/30/22.
- Source: Forbes, “What History Teaches Us About Inflation And Commercial Real Estate,” 7/18/22.
- Sources: NAREIT, “Historical Real Estate Performance Before, During, and After U.S. Recessions, 11/8/22 and CRE, “Is Commercial Real Estate an Inflation Hedge?” 2011.
- Source: Morningstar Direct as of June 30, 2022. The NFI-ODCE Index measures investment returns (gross of fees) of the largest private real estate funds pursuing a core investment strategy, which is typically characterized by low risk, low leverage (less than 40%), and stable properties diversified across the United States. The MSCI US IMI Real Estate 25/50 Index (USD) is designed to capture the large-, mid- and small-cap segments of the US equity universe. Indexes are unmanaged and one cannot directly invest in them. They do not include fees, expenses or sales charges. Past performance is not an indicator or a guarantee of future results.
- See footnote 6.
- Source: JLL Research, “Industrial Market Overview: Q2 2022,” 2022.
WHAT ARE THE RISKS?
All investments involve risks, including the possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Stocks historically have outperformed other asset classes over the long term but tend to fluctuate more dramatically over the short term. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds adjust to a rise in interest rates, the share price may decline.
The risks associated with a real estate strategy include, but are not limited to various risks inherent in the ownership of real estate property, such as fluctuations in lease occupancy rates and operating expenses, variations in rental schedules, which in turn may be adversely affected by general and local economic conditions, the supply and demand for real estate properties, zoning laws, rent control laws, real property taxes, the availability and costs of financing, environmental laws, and uninsured losses (generally from catastrophic events such as earthquakes, floods and wars).
Investments in alternative investment strategies are complex and speculative investments, entail significant risk and should not be considered a complete investment program. Depending on the product invested in, an investment in alternative investments may provide for only limited liquidity and is suitable only for persons who can afford to lose the entire amount of their investment.
Additionally, investments in private securities and obligations may be thinly traded, have no ready market or exchange and require private negotiation, and which may be restricted as to their transferability. These factors may limit the ability to sell such securities at their fair market value.