Alternative investments through private markets and hedge funds

We can help you generate new ideas and uncover innovation through private markets and hedge funds. Our bespoke approach covers co-investments, infrastructure, real estate, secondaries, private equity and venture capital funds, alongside a wide variety of hedge-fund strategies. We also integrate sustainable investment considerations, such as diversity, equity and inclusion (DEI) and impact investing, into our work to deliver holistic solutions and aim to achieve your investment objectives.

Why investors look to allocate to alternative investments

Alternative asset classes can be incorporated into a wide range of investment strategies, styles and risk profiles. This gives you many options to build a portfolio to suit your investment needs — whether you’re looking for new sources of returns or simply want to diversify away from traditional listed equities and bonds.

Alternative investments provide an opportunity to guard against the volatility of equities, hedge against inflation, and achieve better returns. Hedge funds can provide a great way to diversify out of equities without sacrificing returns. Private equity investments aim to attain a significantly higher rate of return than publicly traded equities. Real assets, such as infrastructure and real estate, seek to provide similar benefits alongside a measure of protection against inflation. The impact investing market offers diverse and viable opportunities for investors to advance social and environmental solutions through investments that also produce financial returns. Our global scale and resources can help you access all types of alternative investments, tailored to your needs.

Types of alternative investments

Private markets

Private markets offer diversification away from listed markets and the potential for compelling risk-adjusted returns. They also offer an illiquidity premium and have the potential to provide greater protection from market shocks.

Hedge funds

Hedge funds represent an investment tool that can provide diversification (relative to both equity and interest-rate risk), with minimal trade-off in return.

Benefits of alternative investments

  • New ideas, innovation and diversification

    With moderate correlation to traditional asset classes, alternatives can diversify your portfolio and introduce new innovative ideas and strategies. 

  • Potential for better returns

    Alternative investments offer a different return profile for an institutional portfolio. They tend to have low correlation to stocks and bond markets, adding diversification or hedging against market downturns.

  • Integrate ESG, DEI and impact

    There are a growing number of sustainable investing strategies in private markets. These offer the potential for you to address your business objectives and develop a holistic plan that seeks to reduce risk while maximizing returns.

Three considerations for alternative investments

  1. What is the commitment timeframe?
    Making an allocation to these asset classes is a long-term commitment. In many cases, capital is deployed over a period of several years. This makes it essential to gradually scale up your investment through a well-established cash-flow management strategy. We can help you plan your allocation strategy, deploying capital when needed without disrupting other areas of your portfolio.
  2. How do I access highly-rated managers?
    Establishing and nurturing manager relationships is a vital part of the alternatives investment process. We have longstanding and deep-rooted relationships with managers across all alternative asset classes around the world — managers who seek long-term, like-minded investors. We can therefore offer you access to the strategies and managers best suited to your needs.
  3. How do I stay on top of innovation?
    The universe of alternative investments is growing as managers innovate and new opportunities arise. Keeping pace with these changes requires global reach and significant research capabilities. Our large team of researchers around the world are constantly monitoring existing managers and funds, and are well positioned to identify the most appropriate opportunities for you. 

Integrating alternative investments into your portfolio

Whether you're considering alternative investments for the first time or have an established portfolio, our flexible approach can help you achieve your goals. We adapt our services to match your requirements.

  • Access manager research

    MercerInsight®, an alliance with eVestment, provides access to insights and analytics on more than 6,700 managers and 35,000 strategies1. Get MercerInsight®.

  • Seek advice

    We can provide guidance and advice on your alternatives strategy, alongside access to our global manager research network. We'll help you build your portfolio. Contact us today.

  • Implement a solution

    We can help you design and implement an investment plan to suit your needs and complement your strengths. Our offering includes our fully outsourced chief investment officer (OCIO) or fiduciary management services. Discover our solutions.

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Alternative investment strategies

The alternatives strategy you choose will depend on a range of factors, including your specific objectives, risk tolerance and liquidity requirements. We can help you explore all the available options and customize a strategy that works for you.

  • Co-investments

    Co-investments have the potential to deliver greater diversification, lower fees and higher net returns and, provide a more tailored exposure set.

  • Impact investing

    Impact investments have the potential to help you find an optimal balance between making a positive change and delivering better returns. 

  • Infrastructure

    Infrastructure investments have the potential to deliver greater diversification, inflation protection and longer-term sustainability. 

  • Private debt and credit

    Private debt strategies have the potential to deliver a higher-yield than listed bonds and retain the potential for capital growth. 

  • Private equity

    Private equity strategies leverage opportunities from the vast number of companies listed under private ownership. 

  • Real-estate

    Investing in real-estate is linked to important sectors of the real economy, including long-term trends such as population shifts.

  • Secondary investments

    Secondary investments have the potential to deliver greater diversification and put your money to work faster than in primary markets investments. 

  • Hedge funds

    Hedge funds are designed to provide diversification in relation to both equity and interest rate risks with minimal give-up in return.

  • Diversity, equity and inclusion

    DEI investing is about allocating to diverse-led funds, run by women or people of colour, primarily within the private equity sector. 

Our alternative investments approach can flex to suit you

Our work begins with the knowledge that no two clients are the same. Whether it’s cash-flow, targeted returns or familiarity with private markets, each organization has its own unique requirements. We know that pension providers, endowment funds, insurance companies and wealth management firms will all have different approaches and needs. Our flexible services allow us to meet these requirements.

We construct flexible private markets solutions across all asset classes. These are designed to help meet each client’s particular needs, objectives and appetite for risk. We offer a range of services, from liquidity budgeting and strategy design to in-depth operational due diligence and standardized reporting. Our dedicated, experienced teams streamline even the most complex of processes to make our clients’ lives easier.

Our fund selection process is rigorous. Mercer typically reviews more than 2,000 fund offerings each year. Following this global review process, we perform due diligence, assign ratings and make recommendations for investments. These are based on each client’s unique portfolio objectives, cash-flow requirements and risk tolerance.

Related insights

    Have confidence in our breadth and depth in alternative investments*

    164B

    US$164 billion in global alternatives assets under advisement

    26B

    US$26 billion in global alternatives under management

    240

    240 alternatives professionals

    30

    30 years' experience in private markets

    27

    27 offices globally

    We're here to help you achieve your investment goals

    Contact our alternative investment specialists today
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    * Mercer’s credentials in order from left to right are as at 30 June 2022, 30 June 2022, 30 June 2022, 30 June 2022 and 30 June 2022.