Portfolio Construction Across All Alternative Asset Classes

Alternative Investment Portfolio Construction Tool

Building optimised alternative investment portfolios across hedge funds, private equity and real assets requires purpose-built tools. AlternativeSoft provides institutional-grade optimisation methods, liquidity constraint modelling and stress testing for all alternative asset classes.

Asset classes:Hedge FundsPrivate EquityPrivate CreditReal EstateInfrastructureReal Assets
Hedgeweek Best Risk Management Software
4 Consecutive Years — 2020 · 2021 · 2022 · 2023
150+
Institutional clients worldwide
$1.5tn+
AuM managed by our clients
500k+
Funds in our database
Trusted by
Aberdeen Asset ManagementAllianceBernsteinBNP ParibasBessemer TrustRaiffeisen Capital ManagementUnigestionLyxor Asset ManagementKedge CapitalLumyna InvestmentsProgressive CapitalAberdeen Asset ManagementAllianceBernsteinBNP ParibasBessemer TrustRaiffeisen Capital ManagementUnigestion
The Problem & The Solution

Portfolio Construction for Alternatives — the Right Approach

Portfolio Construction Challenges for Alternative Investors

Standard optimisation tools assume normally distributed returns and liquid assets — both invalid for most alternative investment strategies.

  • Standard mean-variance optimisation assumes normally distributed returns — invalid for most alternative investment strategies
  • Liquidity constraints and lock-up periods for private market assets are not handled by traditional optimisation tools
  • Combining liquid alternatives (hedge funds) with illiquid alternatives (private equity) in one framework is analytically complex
  • Stress testing an alternatives portfolio requires factor sensitivity analysis beyond standard portfolio tools
  • Communicating alternatives portfolio construction rationale to investment committees requires professional output tools

AlternativeSoft's Alternative Investment Construction Tools

Optimisation methods adapted for the unique characteristics of alternative investments — from non-normal returns to multi-year lock-ups.

  • Mean-CVaR optimisation accounting for tail risk — more appropriate than standard MVO for alternatives with skewed distributions
  • Liquidity constraint modelling for private equity lock-ups and hedge fund redemption terms built directly into the optimiser
  • Unified portfolio framework covering liquid and illiquid alternatives in the same optimisation process
  • Historical stress testing against alternatives-specific scenarios with portfolio-level drawdown analysis
  • One-click IC presentation output with efficient frontier, portfolio statistics and full risk decomposition
Portfolio Construction Tools

Institutional Construction Tools for Alternative Investments

Optimisation methods built for the unique characteristics of alternative investments.

Multi-Method Optimisation

Mean-variance, mean-CVaR, risk parity, minimum variance, maximum Sharpe and Black-Litterman — all adapted for non-normal alternative investment return distributions.

Liquidity Constraint Modelling

Model hedge fund redemption terms and private equity lock-up periods directly in the optimiser. Build liquidity-aware portfolios that match your liability obligations.

Portfolio Constraints

Apply investment policy constraints — maximum and minimum allocations, strategy limits, geographic constraints, liquidity requirements — directly in the optimisation.

Alternatives Stress Testing

Historical stress scenarios relevant to alternatives — credit crisis, equity drawdowns, commodity shocks — with impact analysis at portfolio level.

Risk Decomposition

Decompose optimised portfolio risk by fund, strategy, factor and asset class. Verify the portfolio is genuinely diversified as intended.

IC Presentation Output

Automated IC presentations showing the efficient frontier, selected portfolio, risk decomposition and stress test results — formatted for investment committee use.

150+
Institutional Clients
Worldwide
$1.5tn+
AuM Managed by
Our Clients
500k+
Funds in Our
Database
20+
Years of Excellence
Since 2005
How It Works

How to Construct an Alternatives Portfolio with AlternativeSoft

01

Define the Investment Universe

Select eligible hedge funds, private equity and other alternatives from your approved manager list. Set strategy, liquidity and risk constraints for the optimisation.

02

Optimise the Allocation

Run your preferred construction methodology with your constraint set. Compare multiple portfolio strategies side by side on risk-return characteristics.

03

Stress Test and Present

Run stress tests on your selected portfolio. Generate IC presentation with full rationale and implement using the same platform for ongoing monitoring.

Who This Is For

Who Uses AlternativeSoft for Alternatives Construction

Fund of Funds Managers

Build rigorous, defensible multi-manager allocations using institutional-grade optimisation methods adapted for alternative investment characteristics.

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Pension Funds

Optimise your hedge fund and private market allocation within your broader investment portfolio using consistent risk budgeting methodology.

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Endowments

Build and optimise diversified alternatives portfolios across hedge funds, private equity and real assets with institutional-grade quantitative tools.

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Client Testimonials

Trusted by 150+ Leading Institutions

AlternativeSoft streamlines many useful performance-based analytics including portfolio optimisation, peer evaluation, and relative analyses. An intuitive platform that is additive to our processes.

Aberdeen Asset Management
Head of Risk Management
★★★★★

A practical and user-friendly tool used as part of our portfolio construction and risk management process. Their extensive support and responsiveness provides real added value.

AllianceBernstein
Co-head, Risk Management & Portfolio Construction
★★★★★

From statistical analysis on a single hedge fund to portfolio construction, risk analysis and stress testing — one of the most effective and intuitive tools I have handled.

BNP Paribas
Hedge Fund Solutions
★★★★★
Best Risk Management Software
Hedgeweek — 4 Consecutive Years
Best Portfolio Analytics Platform
HFM European Awards
10+ Industry Awards
Recognised since 2005
ISO & GDPR Compliant
Enterprise-grade Security
FAQ

Frequently Asked Questions

Traditional mean-variance optimisation works poorly for alternatives due to non-normal return distributions, illiquidity and serial correlation. More appropriate methods include mean-CVaR optimisation (accounting for tail risk), robust optimisation (reducing sensitivity to estimation error) and risk parity. AlternativeSoft supports all of these methods.
Private equity is incorporated with appropriate treatment of illiquidity — using PME-adjusted returns for comparability with liquid alternatives and modelling capital call and distribution schedules. Lock-up periods and redemption constraints are modelled directly in the optimisation.
Mean-CVaR (Conditional Value at Risk) optimisation minimises expected tail loss rather than variance, making it more appropriate for alternative investment strategies with skewed or fat-tailed return distributions. It produces portfolios more resilient to large losses than standard mean-variance portfolios.
Yes. AlternativeSoft supports unified portfolio construction across liquid alternatives (hedge funds, mutual funds) and illiquid alternatives (private equity, private credit, real estate, infrastructure) in the same optimisation framework with appropriate treatment of liquidity differences.
AlternativeSoft generates automated IC presentations including the efficient frontier, selected portfolio statistics, risk decomposition by fund and strategy, stress test results and comparison of alternative construction strategies — exported to PDF or PowerPoint.
Request a Demo

See AlternativeSoft
in Action

Join 150+ institutional investors who rely on AlternativeSoft to select and monitor funds. Book a personalised demo with our team today.

  • Live walkthrough of the full platform
  • Tailored to your asset class — hedge funds, mutual funds or private markets
  • Q&A with our investment analytics specialists
  • Free trial access available following the demo
  • Dedicated onboarding and implementation support
Hedgeweek Best Risk Management Software — voted by clients 4 years running
Data integrations include:
BloombergeVestmentMorningstarPreqinPitchbookHFR

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