Foreword

By Matt Botein, Chief Investment Officer & Co-Head, Blackrock Alternative Investors

For decades, people were taught that the basics of investing were simple—you built up your portfolio with a mix of stocks and bonds, adjusting the mix according to your age and tolerance for risk. And for years this was, in fact, the right idea—or at least right enough.

Then came the gut punch of the 2007 financial crisis. Since then, we’ve had to relearn everything we thought we knew. One tough lesson: Relying solely on a mix of stocks and bonds in a portfolio might not be enough anymore.

Unprecedented low yields, equities that seemed detached from fundamentals, bouts of volatility, and a high correlation between asset classes during periods of market distress have all made it tremendously challenging for investors to get the returns or consistent income they need from a traditionally constructed portfolio.

It’s not that the risk-focused investment principles developed decades ago have been discredited, rather, it’s that today’s investment landscape requires a different approach to risk—a different way of thinking about risk, and thus a different set of tools to address it.

For many investors, “alternatives” are the new tools for building portfolios that can help meet today’s challenges.

Alternative investments don’t necessarily have a lot in common, they just happen not to be long-only stocks, bonds, or cash. But that’s the point. Understanding the differences between asset classes is part of the reason for investing in alts in the first place—that is, finding growth opportunities and effectively managing risk when other parts of the market are all more or less moving in the same direction. The possibilities are many: long/short, hedge funds, private equity, real estate, commodities, and more.

But awareness of the wide range of options available is only part of alternative investing.

Understanding how they can fit in a portfolio—how they complement other holdings, what they do to your risk and return profiles—is equally crucial.

Enter Generation Alt.

The book you have before you doesn’t just provide information about the different alternative asset classes. Cliff Jack gives you a strategy for how to understand these investments and the ways that investors can engage with them.

It’s important for investors to consider some key questions: how to select the right manager, how to allocate between different alternative assets, and how to adjust those allocations. Generation Alt provides readers with important insight into these questions.

This book also provides critical lessons for today’s markets that any investor in any asset class could benefit from—learning how to recognize the outdated strategies or assets in your portfolio, the effects of volatility and globalization on your investments, and the “disappearing diversification” in today’s markets. This last point is also a great insight into the why of alternative investing.

But it’s not just the why—this is an actionable book. Cliff also tells you how. How to make the appropriate preparations if you decide to move into alts. How to balance risk and performance. How to think about the different tools available to alternatives investors.

Knowledge is power, and Generation Alt gives investors the knowledge and the confidence they need to make smart alternatives choices.

Use it well.