For too long most individual investors and their financial advisors have lacked access to alternative investments. High minimum investments, asset and income threshold requirements, and operational challenges have historically limited alternative investments to institutions and very high net worth individuals.
Alternatives by Franklin Templeton was created to bring down barriers to alternative investments as an important source of returns for more investors. Welcome to Alternatives by Franklin Templeton. Access Granted.
Investors need solutions and that means delivering capabilities to financial advisors using a consultative approach and a total portfolio outcome mindset. The broad asset class coverage available through Alternatives by Franklin Templeton means we have both the flexibility and expertise to follow the conversation wherever a financial advisor's client needs lead us.
Private equity offers investors the opportunity to participate in a growing
market and to achieve higher return potential compared to public markets.
The asset class has experienced rapid growth in recent years.
The Global Private Equity and Venture Capital Market
$1.8 trillion
in 2008
$7.4 trillion
in 2022
Private credit offers investors an alternative to traditional fixed income
investing and helps minimize the interest sensitivity of their portfolios.
The asset class has experienced explosive growth since the Great Financial Crisis in 2008 and is now slightly smaller than the high yield market.
$300 billion
in 2008
$1.7 trillion
in 2023
Digital assets are a diverse ecosystem offering risk tolerant investors the
potential to generate higher returns with a developing asset class.
The rapid growth of digital assets has the potential to impact the investment landscape
$2.27 trillion
market capitalization
13.65 million
daily active addresses
Venture capital is a subset of private equity and involves the highest amount
of risk and largest potential returns across the stages of business development and private equity investing.
It represents investments in early-stage companies with an idea for a new product or service.
Private real estate offers investors diversification with low correlation to
U.S. stocks and a compliment to traditional fixed income due to attractive inflation hedging income.
Private real estate represents 89% of the $11.6 trillion real estate market
U.S. Commercial Real Estate Market Total Capitalization
$10.3 trillion
Private real estate
$1.3 trillion
Publicly traded REITs
Hedged Strategies represent a diverse group of strategies that may serve multiple
roles in a portfolio.
This has historically made hedged strategies a popular diversification and outcome investing tool for institutional investors.
$4.3 trillion
Hedge funds and liquid alternatives
Franklin Templeton continues to expand our alternative investment capabilities and build innovative products through the acquisition and utilization of independent specialist investment managers, each of whom has deep expertise in a specific asset class and long term experience managing assets for some of the largest institutions in the world.
Learn more about the managers within our six major alternative investment capabilities.
Founded
1982Acquired by FT
2021Clarion Partners is one of the largest pure-play real estate investment managers offering a broad range of real estate strategies across the risk-return spectrum.
"Real estate is all Clarion Partners does, and all it has ever done. This singular focus has enabled Clarion Partners to build one of the most tenured, knowledgeable, and passionate teams in the business."
Founded
1994Acquired by FT
2012Franklin Templeton Investment Solutions (FTIS) Absolute Return Portfolio Management team is a well-established team with deep experience in hedge fund investing. The team provides a full range of hedge fund investment capabilities covering all aspects of hedge fund and liquid alternatives.
"We have always executed around the central idea that strong risk management, beginning with full transparency and extending through a deep understanding of portfolio exposures, is critical to long term success in hedge fund investing. This belief remains at the core of our manager selection and investing from direct systematic strategies through liquid alternatives."
Founded
1994Acquired by FT
2022Lexington Partners is a leading global alternative investment manager of secondary private equity and co-investment funds.
"Lexington helped pioneer the development of the institutional secondary market and has built a global platform to provide liquidity- solutions to an illiquid asset class. Our team is among the most experienced in the secondary market today having completed more than 600 secondary transactions."
Lexington Partners
Founded
2008Acquired by FT
2019Benefit Street Partners is a leading credit-focused alternative asset manager, utilizing a multi-strategy approach targeting attractive opportunities in the global credit markets.
"Benefit Street Partners is a global alternative credit manager. We have a deep history in credit and run multiple investment strategies spanning private and public markets. We aim to capitalize on our information and sourcing advantage to identify the best relative value in the market and create alpha for our investors."
Team formally founded
2020Franklin Templeton Digital Assets has the expertise and resources to help advance your digital asset investment strategy or business. From launching the industry’s first on-chain money market fund, to funding blockchain start-up, Franklin Templeton Digital Assets is setting the pace of innovation for the global asset management industry.
"Franklin Templeton Digital Assets is using its in-depth knowledge of blockchain ecosystems to expand our suite of digital asset strategies and provide financial and wealth management advisors with the tools to meet clients’ needs in a rapidly shifting investment landscape. We believe digital assets have a great deal of thematic tailwinds as industries begin to unlock the potential of blockchain and new types of digital assets are created."
Team formally founded
2015Franklin Venture Partners is the private investing platform of the Franklin Equity Group. The team is based out of Franklin Templeton’s San Mateo headquarters in the heart of Silicon Valley. Franklin Venture Partners invests in late-stage private companies on a trajectory to IPO.
"Members of Franklin Venture Partners have historically been strong public tech investors located in Silicon Valley which we believe is a strategic advantage. In 2015, we began building connectivity into the emerging technology ecosystem, then turned our attention to investing in mid-stage start-ups, with focus on enterprise tech and industrial tech. Since then, we’ve invested in 90 venture deals."
Venture team formally founded
2021Franklin Templeton Digital Assets has the expertise and resources to help advance your digital asset investment strategy or business. From launching the industry’s first on-chain money market fund, to funding blockchain start-up, Franklin Templeton Digital Assets is setting the pace of innovation for the global asset management industry.
"The blockchain venture capital team's focus is finding founders and products that are focused on innovation and improving the world through efficiencies. When you concatenate smart contracts and distributed ledger technology, you can begin to reduce the cost of trust and improve legacy businesses in a substantial way."
Alternative investments have attractive features as standalone investments, but the real potential power of alternatives can be best understood in a total portfolio perspective. Below the performance and volatility reducing benefits are demonstrated by starting with a hypothetical 60/40 portfolio, then adding a mix of alternative investments for different desired outcomes.
Risk and Return
12/31/2005 - 12/31/2024
10.0%
Annualized
standard
deviation1
7.9%
Average annual
total return
325.8%
Cumulative
return2
Risk and Return
12/31/2005 - 12/31/2024
10.9%
Annualized
standard
deviation1
8.8%
Average annual
total return
395.1%
Cumulative
return2
NOTE: Hypothetical 18-year portfolio return with and without alternative investments as of 12/31/2024. For illustrative purposes only. Hypothetical portfolio results shown do not represent the performance of an actual investment. Stocks, bonds, private equity, private credit, private real estate, and hedge funds are respectively represented by the S&P 500 Index, Bloomberg U.S. Aggregate Bond Index, United States, MSCI US Private Equity Closed-End Fund Index, Cliffwater Direct Lending Index, NFI-ODCE Index, HFRX Equity Hedge USD Index, HFRX Global Hedge Fund USD Index, HFRX Macro/CTA USD Index. Please note that an investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. Diversification does not assure a profit or protect against market loss. All investments involve risk, including loss of principal. Past performance is no guarantee of future results.
Innovative strategies from independent investment specialists, are available in vehicles such as separately managed accounts, U.S. 40 Act mutual funds, interval funds, and tender-offer funds.
Private markets have historically delivered an "illiquidity premium" which has been captured by many institutions and family offices in their asset allocation to alternatives. Learn more about the illiquidity premium and get some ideas about allocating to private markets.
Product evolution has brought more flexibility for advisors and investors to gain exposure to private markets. Franklin Templeton Institute explores the potential risks and rewards.
CRE debt's historical performance, risk-adjusted returns, correlation to traditional investments, and its resilience during market downturns make it a potentially attractive option as a portfolio diversifier.
Private debt funds typically invest in non-listed debt issues, including bonds, notes, and loans issued by private companies. Private debt has the potential to provide greater returns, control and reduced liquidity, than public markets.
Alternative Credit invests in below-investment-grade fixed income sectors that are relatively illiquid. Alternative Credit may not be available to investors for direct investment as individuals but can be accessed through professionally managed traditional mutual funds.
Unconstrained Strategies trades securities with few restrictions on when and how they buy and sell. Many unconstrained strategies do set a formal or informal a target for volatility that provides a limitation on the level of risks incurred.
Hedge Strategies (also referred to as alternative strategies) use both long and short positions in markets. Some of the most common strategies are long and short equity, global macro, relative value, and credit. Hedge Strategies appeal to investors who are looking to diversify their investment, in an attempt to minimize market beta returns while seeking alpha and risk-adjusted returns.
Real Assets typically invest in tangible assets that derive value from their substance and physical presence. These include real estate, public and private infrastructure, natural resources, precious metals and commodities.
1. Annualized standard deviation: A measure of the degree to which an investment’s or index’s return varies from the average of its previous returns. The larger the standard deviation, the greater likelihood (and risk) that the performance will fluctuate from the average return.
2. Cumulative return: Cumulative return shows the change in the investment’s or index’s value over the time period indicated.
Important Information
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. The views expressed are those of the investment manager and the comments, opinions and analyses may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market.
Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.
“Cliffwater,” “Cliffwater Direct Lending Index,” and “CDLI” are trademarks of Cliffwater LLC. The Cliffwater Direct Lending Indexes (the “Indexes”) and all information on the performance or characteristics thereof (“Index Data”) are owned exclusively by Cliffwater LLC, and are referenced herein under license. Neither Cliffwater nor any of its affiliates sponsor or endorse, or are affiliated with or otherwise connected to, Franklin Templeton Companies LLC, or any of its products or services. All Index Data is provided for informational purposes only, on an “as available” basis, without any warranty of any kind, whether express or implied. Cliffwater and its affiliates do not accept any liability whatsoever for any errors or omissions in the Indexes or Index Data, or arising from any use of the Indexes or Index Data, and no third party may rely on any Indexes or Index Data referenced in this report. No further distribution of Index Data is permitted without the express written consent of Cliffwater. Any reference to or use of the Index or Index Data is subject to the further notices and disclaimers set forth from time to time on Cliffwater’s website.
All investments involve risks, including possible loss of principal. Investments in many alternative investment strategies are complex and speculative, entail significant risk and should not be considered a complete investment program. Depending on the product invested in, an investment in alternative strategies may provide for only limited liquidity and is suitable only for persons who can afford to lose the entire amount of their investment. An investment strategy focused primarily on privately held companies presents certain challenges and involves incremental risks as opposed to investments in public companies, such as dealing with the lack of available information about these companies as well as their general lack of liquidity. Diversification does not guarantee a profit or protect against a loss.
Risks of investing in real estate investments include but are not limited to fluctuations in lease occupancy rates and operating expenses, variations in rental schedules, which in turn may be adversely affected by local, state, national or international economic conditions. Such conditions may be impacted by the supply and demand for real estate properties, zoning laws, rent control laws, real property taxes, the availability and costs of financing, and environmental laws. Furthermore, investments in real estate are also impacted by market disruptions caused by regional concerns, political upheaval, sovereign debt crises, and uninsured losses (generally from catastrophic events such as earthquakes, floods and wars). Investments in real estate related securities, such as asset-backed or mortgage-backed securities are subject to prepayment and extension risks.
An investment in private securities (such as private equity or private credit) or vehicles which invest in them, should be viewed as illiquid and may require a long-term commitment with no certainty of return. The value of and return on such investments will vary due to, among other things, changes in market rates of interest, general economic conditions, economic conditions in particular industries, the condition of financial markets and the financial condition of the issuers of the investments. There also can be no assurance that companies will list their securities on a securities exchange, as such, the lack of an established, liquid secondary market for some investments may have an adverse effect on the market value of those investments and on an investor's ability to dispose of them at a favorable time or price.
Digital assets are subject to risks relating to immature and rapidly developing technology, security vulnerabilities of this technology, (such as theft, loss, or destruction of cryptographic keys), conflicting intellectual property claims, credit risk of digital asset exchanges, regulatory uncertainty, high volatility in their value/price, unclear acceptance by users and global marketplaces, and manipulation or fraud. Portfolio manager(s), service providers to the portfolios and other market participants increasingly depend on complex information technology and communications systems to conduct business functions. These systems are subject to a number of different threats or risks that could adversely affect the portfolio and their investors, despite the efforts of the portfolio manager(s) and service providers to adopt technologies, processes and practices intended to mitigate these risks and protect the security of their computer systems, software, networks and other technology assets, as well as the confidentiality, integrity and availability of information belonging to the portfolios and their investors.
These and other risks pertaining to specific funds, such as those involving investments in specialized industry sectors or use of complex securities, are discussed in each fund's prospectus. By clicking on the fund name, you will be taken to a more detailed fund information page which includes main investments and risks.
Franklin Distributors, LLC. Member FINRA/SIPC. Prior to July 7, 2021, Franklin Templeton Distributors, Inc., and Legg Mason Investor Services, LLC served as mutual fund distributors for Franklin Templeton.