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Alternative investments can be viewed as exposures or strategies that provide different and unique return streams from those offered by traditional equity and fixed-income investments. These different return streams are generally the result of unique characteristics relative to traditional equities and bonds, such as lower correlations, unique volatility patterns or unique up/down capture ratios. Alternative investments are broken into three categories: Alternative Markets, Alternative Investment Approaches and Absolute Return Strategies. An overview of “Alternatives” as an asset class and their power to reduce risk and enhance returns is provided. The key considerations associated with implementing “alternatives” in client portfolios is explored. 

Active share is an important manager evaluation tool but it does not necessarily translate into superior returns. It is one of several risk measures which can help assess a manager, but it gives no indication of manager skill. High active share is often profiled as "better" but it creates a dilemma – portfolios can exhibit risk concentrations which may lead to volatile return streams for investors. Low active share funds should not be excluded from asset allocators' tool kit. Investing in low active share, diversified portfolios can deliver consistent alpha without overriding the investor’s equity allocation decision. Combining passive and active approaches in a low active share solution can be an effective and efficient way of accessing equity markets.

 In 2001 Vanguard devised the Vanguard Adviser’s Alpha concept, outlining how advisers could add value (alpha) through relationship-oriented services such as providing cogent wealth management in financial planning, discipline and guidance, rather than by trying to outperform the market.  This paper takes this framework further by attempting to quantify the benefits that advisers can add relative to others who are not using such strategies.  It focuses on the most common tools for adding value, encompassing both investment-oriented and relationship-oriented strategies and services.

Although the contents of the module are set in the US context, the underlying principles also apply in the New Zealand context.

Earlier analysis by the authors into investors' evolving asset choices, their drivers and underlying rationale, is extended to cover these investment features over the 2013-2015 period. The research identified that while some trends are common across all investor groups, others are specific to a particular group. As a result of dealing with a number of post-2008 factors, outcome-oriented investing has become increasingly important as investors seek to manage market volatility and ultra-low interest rates.