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Key takeaway
Alternatives may help you address client portfolio goals that can be difficult to meet with traditional investments alone.
More access, more ways to build portfolios
Alternative investments are a broad group of assets and strategies that go beyond public stock and bond funds. Historically, they were mainly available to institutional investors. But registered funds and evergreen structures have expanded access for individuals, including high-net-worth clients. Today, advisors are turning to alternatives to help clients meet specific goals and set their practice apart.
Advisors say alternatives benefit their practice
81%
say they enhance their service offering and set their practice apart
67%
say they help them move up-market and attract high-net-worth clients
The Cerulli Edge — U.S. Advisor Edition, 3Q 2025, Cerulli Associates (p. 11).
Types of alternative investments
Alternatives are not a single asset class, and they don’t all work the same way. Think of them as a toolkit where each one is built for a different job and brings its own risks, fees, liquidity terms, and eligibility requirements. These are the three categories you may encounter most.
Possible roles for alternatives
Alternative investments can serve a variety of functions within a client’s portfolio, with each offering distinct potential benefits. Always start with your client’s goal, not the product. Then assess whether the strategy and/or fund structure fits their needs.
- Portfolio diversification: Some alternatives can offer exposure to return drivers that behave differently than traditional public stocks and bonds.
- Volatility dampening: Certain alternatives may help to moderate portfolio fluctuations, creating a steadier investment experience for clients.
- Growth opportunities: Private equity and other growth-oriented strategies may expand access to companies or assets not available in public markets.
- Income generation: Private credit, real estate, or other strategies may provide additional sources of income, but the amount and timing of payments can change and may not be guaranteed.
- Inflation management: Real assets such as timberland, commodities, infrastructure, or real estate may help preserve purchasing power amid inflation.
Why are advisors turning to alternatives?
Simplifying Retail Channel Private Markets Adoption: U.S. Asset Allocation Model Portfolios, Cerulli Associates, 2026 (p. 10).
Common fund structures at a glance
Investment strategy determines what a fund owns and how it seeks returns. But fund structure shapes the client experience — determining who can invest, how money moves in and out, and how often investors receive valuations and reporting.
A fund with no fixed termination date is called an evergreen fund. Because an evergreen fund is not a standardized legal structure, eligibility, registration, valuation, tax reporting, investment minimums, and liquidity vary by fund.
These are two types of evergreen fund structures expanding access to alternative investments for retail investors:
Trade-offs to discuss upfront with clients
Identifying clients who may be a good fit
Alternatives aren’t right for everyone. Start with your client's goal and confirm they are eligible to invest in the fund. Then assess whether an alternative investment's potential role in their portfolio justifies the trade-offs.
Client readiness checklist
- Has a clear portfolio goal that may be difficult to achieve with stocks and bonds alone.
- Meets eligibility requirements, which may include accredited- or qualified-investor status.
- Has a sufficiently long investment time horizon so the holding period aligns with the fund’s terms.
- Has enough liquidity elsewhere to cover foreseeable spending and unexpected cash needs.
- Is comfortable with manager selection, strategy risks, and the fund's trade-offs, terms, and costs.
Questions to consider before recommending alternatives
- Can traditional investments adequately address the client’s portfolio objective?
- What value might this strategy add that the client’s existing investments do not?
- How long can the client stay invested, and when might they need access to the money?
- How and when can shares be purchased, valued, redeemed, or repurchased?
- How much does investment performance depend on manager selection and execution?
- If funded from existing holdings, where would the capital come from, and how might reallocating it affect portfolio risk?
Frequently asked questions
No. Liquidity varies widely. Some funds trade daily, while others allow redemptions or repurchases only at set times. The specific fund structure determines when and how investors may access their money.
No. The diversification benefit depends on what drives the strategy’s gains and losses and how it behaves alongside the client’s other investments.
Interval funds make repurchase offers on a set schedule. Tender-offer funds may offer to repurchase shares periodically, but each fund generally determines the timing and amount. Under either structure, repurchase requests may be limited.
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Disclosures
This content is intended to help advisors structure educational conversations about alternative investments. It is not an investment recommendation. Discussions should be tailored to each client's individual circumstances, goals, and risk profile.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. There can be no assurance private equity funds will achieve higher returns than public equities. Private equity strategies are subject to different investment risks and are generally illiquid. They will experience equity-like volatility at times and are a portfolio of illiquid/private companies. The return of invested capital to limited partners is dependent on the success of the companies held in the portfolio, and the timing of such liquidity is uncertain.
For financial advisor and institutional use only. Not for use with the public. All investing involves risk. Diversification and active investment do not ensure profit or protection against losses. This is for educational and informational purposes only. Nothing herein constitutes investment advice or a recommendation and should not be relied upon as a basis for making an investment decision. This document does not constitute an offer to sell, or a solicitation of an offer to buy, any security or instrument, or a solicitation of interest in any Wellington vehicle, account, or strategy. Opinions expressed reflect the opinions of the author(s) as of the date indicated and are based on the author’s opinions of the current market conditions, which is subject to change. Past events and trends are not necessarily indicative of future events or results. Forward-looking statements should not be considered as guarantees or predictions of future events. While any third-party data used is considered reliable, its accuracy is not guaranteed. This material and/or its contents are current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management.