Skip to Content

The (Limited) Case for Investing in Alternatives

Does Vanguard’s recent private-equity announcement bolster the argument for alts?

Mentioned: ,

Vanguard’s recent announcement that it is launching a private-equity strategy brings front and center (not for the first time) the question of whether (and to what degree) individuals should allocate some portion of their portfolio to alternatives. Granted, Vanguard is initially making the product available only to institutional clients, but given Vanguard’s vast retail presence, not to mention CEO Tim Buckley’s statement that its partnership with HarbourVest Partners “will present an incredible opportunity” for individuals investors, one suspects that it’s only a matter of time.

The notion of “hedge funds for the masses” is hardly new. The boom in liquid alternative mutual funds after the 2008 financial crisis was supposed to provide individual investors with a tantalizing opportunity to access the same types of strategies typically reserved for institutions and the ultra-wealthy, all at a fraction of the cost and with increased transparency and liquidity. Has the reality matched the hype? Should investors look to take advantage of alternative asset classes, whether in liquid public or illiquid private investment structures?

Josh Charlson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.