Dump Alternative Investments?

Do alternative investments (real estate, venture capital, private equity, hedge funds, private credit, infrastructure and energy investments) offer attractive returns and diversification, buffering investors from the vagaries of the stock market? In his March 2025 paper entitled “The Demise of Alternative Investments”, Richard Ennis examines contributions of alternative investments (alts) to pension fund and endowment portfolio net performances. He first looks at costs of investing in alts. He then relates public pension fund and university endowment portfolio alt allocations to their excess returns (relative to risk-matched simple portfolios of U.S. and non-U.S. stocks and investment-grade U.S. bonds). Using results of prior research, a sample of 50 large U.S. public pension funds for the 16 fiscal years ended June 2024 and 16 years of composite performance data for large university endowments from the National Association of College and University Business Officers, he finds that:

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