Alternative Asset Investment Groups

Buy side alts is a difficult subject to tackle because everyone has a different view on it. Here's how I would best describe what I know of them:

1) Strategic partnerships: Bespoke mandates for your clients made up of alternative funds (HF/PE, etc.) and potentially some hedges or other derivative overlay. E.g.: Create a fund that will return me 6% with only -2% performance in a poor equity market.

2) Advisory relationship: Doing macro research and recommending new areas of focus (i.e., you should invest in Latin American forest - here's how and who to invest with). Or having a list of managers that you either actively invest with or have underwritten to recommend.

3) Alternatives related funds: These are funds that invest in alternatives related businesses, but not direct. So this could be things like a secondary PE fund that buys stub pieces from PE firms, or GP stakes like buying a piece of a PE manager. These are funds, but as you might imagine the underwriting is completely different from traditional PE.

4) Funds in direct competition with PE firms. I would say that this is where a lot have tried but have failed. I think this will be growing in the future and you're still yet to see a major merger of two different businesses but that is probably coming in the next few years.

I view this as a trend that will continue - as investors are less interested in looking for public alpha and push more into alternatives, long only shops will be trying to find ways to grow with that demand. Hard thing is that not many firms have found a sustainable business model so it will inevitably change until they find their niche. In regard to what you are doing I think you will be doing portfolio analysis/modeling, portfolio optimization/scenario analysis, manager due diligence, and maybe some underwriting.

Hope this helps.