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Using Alternative Investments to help weather market ups and downs
Please see important information at the end of this video.
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Nancy Fahmy Head of Alternative Investments Merrill and Bank of America Private Bank
At Merrill, we have pioneered advancements in the alternative investment space to connect our clients with a variety of unique investing opportunities, many of which are not always available at other firms.
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Premiere alternative investment managers
We work with many premiere alternative investment managers from around the world on an exclusive basis. We take the time to evaluate each and every one…
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Investment Approach
looking closely at their investment approach…
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Internal processes
internal processes
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Outlook on the markets
and outlook on the markets. Only those that meet our rigorous standards are offered to our clients.
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Hedge funds
Private equity investments
Private credit
Real asset strategies
Non-traditional mutual funds
We have one of the most expansive offerings in wealth management… including hedge funds, private equity investments, private credit, real asset strategies and non-traditional mutual funds.
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Alternative Investments
All market environments
We believe that there’s a place in most every client’s portfolio for alternative investments in all market environments.
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Seeking diversification and long term growth potential
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As clients invest for the long-term, they need to tap into sources of growth to help them build wealth over time.
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Joel Greenblatt Managing Principal & Co-Chief Investment Officer Gotham Asset Management
This is where an allocation to hedge funds may help. Hedge fund managers generally pursue strategies that are unconstrained by the mandates of traditional equity managers.
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Hedge fund managers take contrarian views
use leverage
They often take contrarian views or use leverage to seek out long-term growth potential that takes advantage of opportunities in the markets and across market cycles.
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While hedge funds can be more volatile and less liquid than other investments, when part of a larger diversified strategy, they can offer a dual benefit of diversifying an investor’s exposure as well as potentially offering long-term alpha.
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The value add of the manager
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When looking to invest in growing companies, public equity markets don’t offer investors access to all the opportunities available.
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David Rubenstein Co-Founder and Co-Chairman The Carlyle Group
New, innovative firms often start off as private enterprises. And some of the fastest growing new companies have been staying private for longer.
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Powerful tools
Private equity and private debt investments are powerful tools to expand the universe for investors, allowing them to tap into these younger, high potential firms.
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Value-add of the manager
Selecting the right private equity investment also allows investors to benefit from the value-add of the manager
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Hands-on role
many of whom take a hands-on role in guiding the companies they invest in.
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This can create lasting value for investors who are willing to take on the risk of investing in younger firms with less public and regulatory oversight and are comfortable with making illiquid investments
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Positioned to weather the ups and downs
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Markets will be choppy at times with excessive volatility particularly during turning points in cycles. And traditional asset classes can sometimes be highly correlated with each other.
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Chris Hyzy Chief Investment Officer Merrill and Bank of America Private Bank
Across market cycles, one thing we have seen is that portfolios with an allocation to alternative investments are generally better positioned to weather these inevitable ups and downs.
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Potential for enhanced returns
Some alternative investments offer the potential for enhanced returns that can help grow your wealth over the long term.
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Diversify
Others can help diversify a portfolio, which can be useful in volatile markets. And many offer a low correlation to traditional investments…
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Mitigate risk
which can help mitigate risk…
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Reduce the impact of inflation
reduce the impact of the inflation, and further diversify your portfolio.
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So, I encourage you to talk to your advisor about alternative investments and the role they can play in helping your portfolio weather the ups and downs.
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What would you like the power to do?
Talk to your advisor about alternative investments.
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Important information
David Rubenstein, The Carlyle Group, Joel Greenblatt and Gothm Asset Management are not affiliated with Bank of America Corporation.
The investments discussed have varying degrees of risk, and there is always the potential of losing money when you invest in securities, and future prospects may not be realized.
When considering the appropriateness of mutual funds or Alternative Investments, please be aware that there are significant differences between these investments which will cause their investment portfolios, performance, tax treatment and other factors to differ. These differences include the types, availability and diversity of sevurities that can be purchased, economies of scale, regulations and other factors applicable to their management.
Bank of America, Merrill, their affiliates, and advisors do not provide legal, tax or accounting advice. Clients should consult their legal and/or tax advidors before making any financial decisions.
Alternative Investments are speculative and involve a high degree of risk. There generally are no readily available secondary markets, none are expected to develop and there may be restrictions on transferring fund investments. Alternative Investments may engage in leverage that can increase risk of loss, performance may be volatile and funds may have high fees and expenses that reduce returns. Alternative Investments are not in the best interest of all investors. Inestors may lose all or a portion of the capital invested.
Hedge funds can result in higher return potential but also higher loss potential. It is required that any prospective investor must meet certain qualifications and acknowledge they understand the risks associated with investing in hedge funds. An investment in a hedge fund involves a substantially more complicated set of risk factors than traditional investments in stocks or bonds, including the risks of using derivatives, leverage, and short sales which can magnify potential losses or gains. Restrictions exist on the ability to redeem units in a hedge fund. Hedge funds are speculative and involve a high degree of risk.
Investments in private equity involve a high degree of risk and therefore should only be undertaken by qualified investors whose financial resources are sufficient to enable them to assume these risks and to bear the loss of all or part of their investment. Investments in private equity include risks not otherwise presented in public market investments. Furthermore, private equity investors are afforded less regulatory protections than investors in registered public securities.
Non-Traditional Mutual Funds are subject to significant investment and strategy restrictions not imposed on unregistered hedge funds. They may be an imperfect fit as a hedge fund substitute, but may provide diversification benefits to the overall portfolio. Non-traditional mutual funds have been vetted by CIO and determined to have certain strategy and historical performance characteristics which qualify them for inclusion as a reasonable proxy for the indicated hedge fund strategy. While Non-Traditional Mutual Funds may not be subject to the full eligibility requirements that apply to hedge funds, they may not be in the best interest of all clients, given their ability to engage in alternative strategies within the paramaters of the Invetment Company Act of 1940.
Alternative investments are intended for qualified investors only. Alternative Investments such as derivatives, hedge funds, private equity funds, and funds of funds can result in higher return potential but also higher loss potential. Changes in economic conditions or other circumstances may adversely affect your investments. Before you invest in alternative investments, you should consider your overall financial situation, how much money you have to invest, your need for liquidity and your tolerance for risk. Alternative Investments are speculative and involve a high degree of risk. Risk management, and diversification processes seek to mitigate, but cannot eliminate risk, nor do they imply low risk.
Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. There are important differences between brokerage and investment advisory services, including the type of advice and assistance procided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when determining which service or services to select. For more information about these services and their differences, speak with your advisor.
This material is provided for information purposes only and does not constitute an offer to purchase any security or investment or a solicitation of investment advice. An offer of interests in any particular investment can only be made pursuant to the relevant private placement memorandum, which contains important information concerning risk factors, performance and other material aspects of the invesmtne and must be carefully read before any decision to invest is made.
This material is provided for informational purposes only by the Investment Solutions Group (ISG) Alternative Investments group and is not a publication of BofA Global Research. The views expressed are those of ISG, are developed in consultation with the ISG Chief Investment Office (CIO) and are subject to change. While sone of the information contained in this presentation may dray upon research by BofA Global Research, this material is neither reviewed nor approved by BofA Global Research.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics.
CIO viewpoints are developed for Bank of America Private Bank, a dicision of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Investment products:
Are Not FDIC Insured
Are Not Bank Guaranteed
May Lose Value
Investment products and services may be available through a relationship with Merrill Lynch Wealth Management or Bank of America Private Bank. Merrill Lynch Wealth Management makes available products and services offered by Merrill Lunch, Pierce, Fenner & Smith Incorporated (“MLPF&S”) which is a registered broker-dealer and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp”).
Certain Bank of America Private Bank associates are registered representatives with MLPF&S and may assist you with investment products and services provided through MLPF&S and other nonbank investment affiliates. Bank of America Private Bank is a division of Bank of America, N. A., Member FDIC, and a wholly owned subsidiary of BofA Corp.
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