How to Diversify with Alternatives in 2026

UBS maintains a positive view on alternative investments as essential diversifiers in 2026, highlighting a strong rebound in hedge fund alpha and ongoing opportunities in private markets despite credit stress.

Key Takeaways

• 1.Hedge funds showed a strong recovery in April 2026, with equity hedge managers delivering their strongest alpha since 2009.
• 2.Private markets, including private equity and infrastructure, continue to offer diversification, though selectivity is required in direct lending due to credit stress.
• 3.Portfolio construction should blend liquid (hedge funds) and less liquid (private markets) strategies to balance risk and long-term returns.

Table of Contents

• Hedge fund performance rebounded in April, and can steady portfolios
• Private markets still offer opportunities for diversification, return generation, and income
• We see numerous paths to invest in alternatives, subject to careful risk management
• New this week
• Did you know?
• Investment view
• Non-Traditional Assets
• Disclaimer

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