Alternative Investments Choice & Expertise

Legg Mason is committed to being your partner in this growing asset class

Alternative investments have risk and return characteristics different from traditional stocks and bonds – making them efficient levers for investors targeting investment outcomes such as enhancing returns, managing risk or diversifying exposures.

Given the highly specialized nature of these strategies, Legg Mason believes it's important to partner with an established manager with the appropriate experience, resources and vision.

* Source: Legg Mason, as of September 30, 2018.
** Experience based on founding years of investment affiliates.
Alternative investments such as real assets, private investments and derivatives are subject to risk, that may disproportionately increase losses, and have a potentially large impact on portfolio performance. Outcomes are not guaranteed.

Explore

Legg Mason’s Alternative Solutions - Real Assets, Private Investments and a diverse range of Alternative Strategies.

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We are here to guide you through your journey and answer any questions you may have. Call us at 1-800-544-7835

Recognize the Opportunity

The expanding alternatives investment universe and an informed approach to strategy selection offer flexibility.

Alternative asset classes, structures and strategies enable investors to address specific financial goals through investments that may be nuanced and relatively hard to access by individual investors.

Real Assets

Real estate, infrastructure, commodities and MLPs may serve as diversifiers, income plays and potential inflation hedges.

Private Investments

Traditional asset classes in non-traditional structures, such as private equity and credit, which may be available only to certain investors.

Alternative Strategies

Dynamic integration of an expanded toolkit of financial instruments and investment techniques targeting a variety of outcomes.

Explore the Outcomes

Alternatives may improve the risk-return profile of a traditional portfolio.

Most investors are familiar with the concept of diversifying within and across the three traditional asset classes — stocks, bonds and cash.

Today’s market environment, however, poses risks that may call for a higher degree of diversification, given elevated valuations, hard-to-predict political risks and the high-profile policy moves of central banks. That makes it imperative to consider how solutions with potentially lower correlations to traditional holdings can enable investors to target additional sources of returns, mitigate market volatility and focus on specific investor needs.

Annualized returns and standard deviation for alternative investments over the long term

Source: Bloomberg, as of September 30, 2018. Historical return and risk asset class observations are based on quarterly data from January 1 1999 to September 30 2018.

Past performance is not a guarantee of future results. Index returns do not reflect any fees, expenses or sales charges. Indexes are unmanaged and investors cannot invest directly in an index. See the Glossary of Terms for index definitions. Standard deviation measures the risk or volatility of an investment’s return over a particular time period; the greater the number, the greater the risk.

This information is provided for illustrative purposes only. Hypothetical portfolio results shown do not represent the performance of an actual investment. The results are rebalanced quarterly and assume reinvestment of ordinary income and distributions. The results do not reflect a deduction of fees, taxes, and other expenses, if any, which would reduce performance.

* Portfolio with Alternatives is represented by a mix of 45% S&P 500 Total Return Index, 30% Bloomberg Barclays U.S. Aggregate, and 5% of each alternative index equally weighted - HFRI Fund Weighted Composite Index, NCREIF Property, Alerian MLP Index, Bloomberg Commodity Index, and MSCI World Infrastructure Sector Capped Index. Varying allocation percentages and/or investment time periods would produce different results.

** Traditional portfolio is represented by a 60-40 mix of S&P 500 Total Return Index and Bloomberg Barclays U.S. Aggregate.

Important risk information: Investments in energy-related MLPs are subject to unique risks, including the risks of declines in energy and commodity prices, decreases in energy demand, adverse weather conditions, natural or other disasters, changes in government regulation, and changes in tax laws. Unregistered hedge funds are highly speculative investments that employ aggressive investment strategies and carry substantial risk. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses, and have a potentially large impact on portfolio performance. Companies in the infrastructure industry may be subject to a variety of factors that could adversely affect their business or operations, including high interest costs in connection with capital construction programs, high degrees of leverage, costs associated with governmental, environmental and other regulations, the effects of economic slowdowns, increased competition from other providers of services, uncertainties concerning costs, the level of government spending on infrastructure projects, and other factors. Asset-backed, mortgage-backed or mortgage-related securities are subject to prepayment and extension risks.

Diversification does not guarantee a profit or protect against a loss.

Alternative strategies can expand a traditional portfolio's efficient frontier

Hypothetical example of adding alternative investments to a traditional allocation (January 1990 – September 2018)

Source: Bloomberg, as of September 30, 2018. Quarterly returns from 1Q 1999 - 3Q 2018. Stocks, Bonds and Alternative weights are determined by funding a 25% Alternatives weight equally from Stocks and Bonds. Stocks are represented by S&P 500 Total Return Index. Bonds are represented by Bloomberg Barclays U.S. Aggregate Bond Index. Alternatives represent an equal weighted across 5 categories: NCREIF Property Index, Alerian MLP Index, Bloomberg Commodity Index, MSCI World Infrastructure Sector Capped Index, HFRI Fund Weighted Composite Index. Varying allocation percentages and/or investment time periods would produce different results.

This information is provided for illustrative purposes only. Hypothetical portfolio results shown do not represent the performance of an actual investment. The efficient frontier represents the best expected combination mix of securities under consideration into a portfolio that produces the maximum expected return for a given level of risk. The efficient frontier concept is for illustrative purposes only and not an investment recommendation. Standard deviation measures the risk or volatility of an investment’s return over a particular time period; the greater the number, the greater the risk.

Important risk information: Investments in energy-related MLPs are subject to unique risks, including the risks of declines in energy and commodity prices, decreases in energy demand, adverse weather conditions, natural or other disasters, changes in government regulation, and changes in tax laws. Unregistered hedge funds are highly speculative investments that employ aggressive investment strategies and carry substantial risk. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses, and have a potentially large impact on portfolio performance. Companies in the infrastructure industry may be subject to a variety of factors that could adversely affect their business or operations, including high interest costs in connection with capital construction programs, high degrees of leverage, costs associated with governmental, environmental and other regulations, the effects of economic slowdowns, increased competition from other providers of services, uncertainties concerning costs, the level of government spending on infrastructure projects, and other factors. Asset-backed, mortgage-backed or mortgage-related securities are subject to prepayment and extension risks.

Diversification does not guarantee a profit or protect against a loss.

Can help manage risk during difficult market environments

Source: Bloomberg, as of November 30, 2018. Drawdown illustration depicts losses from prior highs. Drawdown observations are based on monthly data from January 1998 to November 2018.

Diversification does not guarantee a profit or protect against a loss.

Alternatives may offer lower correlations and diversification benefits

Source: Bloomberg, as of September 30, 2018. Correlation observations are based on quarterly data from Q1 1999 to Q3 2018. Correlation is a statistical measure of the relationship between two sets of data. When asset prices move together, they are described as positively correlated; when they move opposite to each other, the correlation is described as negative or inverse. If price movements have no relationship to each other, they are described as uncorrelated. This information is provided for illustrative purposes only.

Important risk information: Investments in energy-related MLPs are subject to unique risks, including the risks of declines in energy and commodity prices, decreases in energy demand, adverse weather conditions, natural or other disasters, changes in government regulation, and changes in tax laws. Unregistered hedge funds are highly speculative investments that employ aggressive investment strategies and carry substantial risk. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses, and have a potentially large impact on portfolio performance. Companies in the infrastructure industry may be subject to a variety of factors that could adversely affect their business or operations, including high interest costs in connection with capital construction programs, high degrees of leverage, costs associated with governmental, environmental and other regulations, the effects of economic slowdowns, increased competition from other providers of services, uncertainties concerning costs, the level of government spending on infrastructure projects, and other factors. Asset-backed, mortgage-backed or mortgage-related securities are subject to prepayment and extension risks.

Diversification does not guarantee a profit or protect against a loss.

“Legg Mason has expanded its Alternatives platform consistently through the years. Our investment managers offer specialized capabilities across a range of asset classes, structures and strategies. Each investment team operates with independent thinking to help deliver investment solutions for both individuals and institutions.”
Victoria Rock, Head of Alternatives Product

Established Expertise

Logos of Legg Mason Investment Affiliates

With a multitude of alternative products in the marketplace, it is important to partner with an established manager with the experience, resources and vision appropriate to these sophisticated solutions.

Solutions

Navigate together with Legg Mason the spectrum of alternative investments.

We are passionate about delivering high-quality investment solutions to help you achieve your investment goals. Legg Mason's alternatives platform has an expansive footprint and investment expertise to deliver differentiated alternative solutions. Legg Mason and its investment affiliates are committed to offering innovative solutions across multiple asset classes and investment outcomes.

We are here to guide you through your journey and answer any questions you may have.