As alternatives continue to become ever more frequent in the makeup of portfolios, opportunities to diversify across private equity, private debt, real assets and hedge funds are evolving.

But with an expanding opportunity set comes the challenge of identifying where the future growth opportunities are, as well as the added complexity in evaluating the optimal solutions to solve investors’ unique portfolio challenges.

In our recent paper, Where now for alternatives? we outline some of the emerging areas for growth and innovation in private markets and hedge funds that investors can capitalize on in 2025. 

  • Private debt: may be poised for growth as it broadens its reach into specialty finance and asset-based lending, flourishing in reponse to a trend in banks withdrawing from private lending.

  • As private equity: matures, it offers the potential for more consistent returns, even in periods of higher rates. While some managers may face challenges, those with strong operational strategies may be poised for continued earnings growth and successful exits, underscoring the importance of careful manager selection.   

  • Private real assets: offering diverse opportunities for portfolio diversification and potential outperformance. In 2025, the intersection of private equity, infrastructure, and real estate may present compelling investment opportunities, particularly as we see a trend in infrastructure investors shifting towards more operationally focused investments. 

  • Hedge funds: often excel at diversifying both equity and interest rate risks, serving as a valuable complement to traditional fixed income investments. While some investors may perceive them as underperforming, this often stems from a misunderstanding of their diverse strategies and the role they play in a well-rounded portfolio.

Download the full report 

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Integrating alternative investments into a diversified portfolio 

The alternatives strategy you choose will depend on a range of factors, including your specific objectives, risk tolerance and liquidity requirements. Whether you're considering alternative investments for the first time or have an established portfolio, our flexible approach aims to help you achieve your goals, exploring all the available options and customizing a strategy that works for you.

How can Mercer help you?

With an ever-evolving market landscape, investors face myriad challenges in reaching their financial goals. We partner with our clients to build agile, more resilient and innovative portfolios, designed to deliver their individual governance and investment needs.

We do this by leveraging our investment advisory heritage, our deep knowledge of the global investment universe, and our capabilities across research, advice and solutions. Whether you're considering alternative investments for the first time or have an established portfolio, our flexible approach aims to help you achieve your goals. We adapt our services to match your requirements:

  • Leverage leading manager research: MercerInsight®, an alliance with eVestment, provides access to insights and analytics on more than 6,700 managers and 35,000 strategies.
  • Access to highly-rated asset managers: Explore asset allocation strategies and investments that can help investors reach their individual goals.
  • Governance as an accelerator, not a brake: Leverage our expertise to expand your governance capabilities and improve your due diligence processes. This will help you to identify optimum investment opportunities.
  • Implementation solutions: We can help you design and implement an investment plan to suit your needs and complement your strengths. Our offering includes our fully outsourced chief investment officer (OCIO) or fiduciary management services.

As a partner to our clients’ portfolios, we look beyond any single perspective on the investment landscape to pursue outcomes that address today’s investment challenges and importantly, prepare our clients for the future.

  • Research that helps drive performance

    Asset allocation strategies and the right investments can help investors reach their goals.

  • Helping to provide expert advice

    Uncover the right investment and retirement strategies that fit your unique requirements to help meet your goals.

  • Governance that helps reduce risk

    A strong governance foundation is critical to long term investment success.

  • Scale that helps enhance value

    Consider how an OCIO solution could help your organization.

Where now for alternatives?

Four emerging areas for growth and innovation in private markets and hedge funds for investors to capitalize on in 2025. 
Download today.