Andrew Kennedy, Executive Director and Head of RIA Channel for FS Investments, joined Keith Black, Managing Director of RIA Channel, at the CAIS Alternative Investment Summit to discuss how changes in the bond market are highlighting the case for diversification using alternative investments.
FS is an $80 billion alternative investments and private markets firm focused on delivering unique alpha opportunities for clients. An asset base of this size is large enough to have ample resources but small enough to make interesting and niche investments. FS was founded in 2007 to deliver institutional-quality investment strategies to individual investors, which was uncommon at that time. Today, the firm’s asset base is sourced equally from institutional and private wealth investors.
One of the challenges for advisors allocating to alternative investments is the proliferation of strategies, vehicles, and asset managers, which creates a burden of due diligence. There is help for advisors, including educational resources from FS and due diligence available from CAIS. The culture at FS is centered around clients, colleagues, and community, with the firm seeking to be strong partners for its investors.
Since the rate environment changed in 2022, investors have not been able to benefit from the low correlation between stock and bond returns that enhanced diversification over the last twenty years. This shatters the assumption that investors can always rely on stocks and bonds to be natural diversifiers. Private credit can provide diversification, as floating-rate investments are less subject to duration risk and interest rate volatility. Multi-strategy alternative funds can be designed to have near-zero betas to the S&P 500 and the Bloomberg Aggregate Bond Index (Agg) while having risk and return similar to the fixed-income market.
WEBCAST – What’s Next in Alternative Investments?
The U.S. middle market remains a standout within the global private equity landscape, accounting for over 60% of deal flow in 2024, despite a challenging market backdrop. With rates expected to stay high into next year, sponsors prioritizing revenue growth and margin expansion will be well-positioned. Join Daniel Wilk, Head of Private Equity Solutions, and Madison Murphy, VP, Research and Fund Communications, for a discussion on how middle market private equity is well-positioned to navigate the higher rate environment and benefit from the economic and policy tailwinds spurring U.S. growth in 2025 and beyond.
Discussion topics:
- Finding growth at a reasonable price (GARP) in private markets amid historically elevated public equity valuations
- Evaluating the outlook for private equity in a higher-for-longer rate environment
- Exploring how U.S. policy and economic tailwinds are enhancing the opportunity set in middle market private equity
Accepted for 1 CFP® / IWI / CFA CE Credit