Alternative Investments

Alternative Investments

"Alternative investments" can describe everything other than traditional strategies in publicly traded stocks and bonds.  Most professionals use the term to describe two categories: private equity and hedge funds.  Hirtle Callaghan has been active in both since the early 1990s. 

These two broad categories of investing can include various investments that have very little in common other than structure.  Alternative investments are typically offered in limited partnership form.  The investment manager functions as the general partner and investors are limited partners.  Both categories of alternative investments are illiquid, with private equity usually being significantly more illiquid than hedge funds. 

Our approach to alternative investing is different in several important ways.

• We build alternative investment programs rather than just investing in one deal at a time.
• We see private equity as an asset class that, if skillfully managed, can produce returns that are consistently 5% greater than the public equity markets.
• We do not consider hedge funds to be an asset class.  Rather, we see them as a series of "alpha" strategies that can, when properly deployed, enhance the compound return of a portfolio by reducing its volatility. 
• Although we build and manage multi-fund programs, what the industry calls a "fund-of-funds," we charge no fund-of-funds fee, because we see that as a conflict of interest.