Alternative Sources of Income

Finding Yield with Alternative Investments

Leveraging Alternatives for Income Potential

Introducing private market alternatives into a traditional portfolio may help investors face today’s yield challenges. In particular, areas such as private real estate and private credit may be worth a close look by income-oriented investors.

Comparison of Yield

1.4%

Annual Yield from a Traditional 60/40 Portfolio1

3.5%

Annual Yield from a Portfolio with Private Market Allocation2

  1. Traditional 60/40 portfolio is comprised of 60% Equities and 40% Fixed Income.
  2. The portfolio with private market allocation has the following asset class allocation: Private Credit (20%), Real Estate (20), Fixed Income (30%) and Equities (30%).

Source: Bloomberg, Morningstar, as of 3/31/2021. The yield on the traditional 60/40 portfolio was calculated using the S&P 500 Dividend Yield and the annualized Bloomberg Barclays U.S. Aggregate Bond Yield. The yield on the portfolio with a private market alternative allocation was calculated using the S&P 500 Dividend Yield, the annualized Bloomberg Barclays U.S. Aggregate Bond Yield, annualized Cliffwater Direct Lending Index quarterly income and the annualized NCREIF ODCE quarterly income. There can be no assurance that any Blackstone fund or investment will achieve its objectives or avoid substantial losses, or that alternative investments will generate higher yields than other investments. Annualized yields are as of March 31, 2021. Annualized returns and volatility are calculated based on the quarterly returns over the 15-year period from April 2006 to March 2021. The information herein is provided for educational purposes only and should not be construed as financial or investment advice, nor should any information on this webpage be relied on when making an investment decision. Opinions expressed reflect the current opinions of Blackstone as of the date hereof and are based on Blackstone’s opinions of the current market environment, which is subject to change. Past events and trends do not imply, predict or guarantee, and are not necessarily indicative of, future events or results.

Finding Income in a Low Rate World

A traditional portfolio no longer offers the yield it once did

Historical Yield of a 60/40 Stock/Bond Portfolio (%)

Source: Bloomberg, Morningstar, as of 3/31/2021. Hypothetical portfolio allocated 60% to the S&P 500 Index, 40% to the Bloomberg Barclays U.S. Aggregate Bond Index. The yield on the traditional 60/40 portfolio was calculated using the S&P 500 Index Dividend Yield and the annualized Bloomberg Barclays U.S. Aggregate Index Yield. Portfolio yields are shown from March 2008 to March 2021. The information herein is provided for educational purposes only and should not be construed as financial or investment advice, nor should any information on this webpage be relied on when making an investment decision. Opinions expressed reflect the current opinions of Blackstone as of the date hereof and are based on Blackstone’s opinions of the current market environment, which is subject to change. Past events and trends do not imply, predict or guarantee, and are not necessarily indicative of, future events or results.  

Private credit and private real estate have historically offered higher yields than other asset classes

Yield Comparison (Average Annual Yield, Trailing 10 Years as of Q1’21)

Source: Morningstar, Cliffwater, NCREIF, Bloomberg, as of 3/31/2021. The yields of the asset classes presented are based on the following indices: For Private Credit: Cliffwater Direct Lending; for Senior Loans: S&P/LSTA Leveraged Loan; for High Yield: Bloomberg Barclays U.S. Corporate High Yield; for Private Real Estate: NCREIF ODCE; for Public REITS: MSCI U.S. REIT; for Corporates: Bloomberg Barclays U.S. Corporate Bond; for Investment Grade: Bloomberg Barclays U.S. Aggregate Bond; for Large Cap Equities: S&P 500; for Municipal Bonds: Bloomberg Barclays Municipal; for Treasuries: Bloomberg Barclays Intermediate Treasury. The information herein is provided for educational purposes only and should not be construed as financial or investment advice, nor should any information on this webpage be relied on when making an investment decision. Opinions expressed reflect opinions of Blackstone as of the date hereof and are based on Blackstone’s opinions of the current market environment, which is subject to change. Past events and trends do not imply, predict or guarantee, and are not necessarily indicative of, future events or results.

Joe Zidle: Facing the Income Challenge

Blackstone Private Wealth Solutions’ Chief Investment Strategist explains possible portfolio adaptations in a yield-starved world.

Income: A Scarce Resource

Finding potential sources of income can be challenging in today’s market – private alternatives may help

Matching Private Alternatives to Common Investment Goals

Individual private alternative asset classes may be deployed in pursuit of specific goals.

Enhanced Returns

Private Equity Growth Equity Life Sciences Private Opportunistic Real Estate Distressed Credit

Income

Private Credit Infrastructure Private Core Real Estate

Risk Reduction

Hedge Funds Multi-Alternatives

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