Alternative Assets for the Masses

Institutional investors have long used private equity and hedge funds to achieve overall returns far higher than those eked out by individuals. In the 10 years ended Dec. 31, 2008, Hedge Fund Research's Fund Weighted Composite Index gained 7% per year, on average, while the Thomson Reuters U.S. Private Equity Performance Index returned an annual average of 17%. That compares with a 13% cumulative loss for the Standard & Poor's (MHP) 500-stock index.

Until recently the masses lacked easy access to these asset classes. Over the past year, however, the number of products that offer individual investors ways to invest in alternative assets has swelled. Should individuals jump in now that they have the chance?