Riskalyze is happy to support many Limited Partnerships and other alternatives.
The easiest way to find an alternative on Riskalyze is by entering the identifier into the "Add Investment" field OR by searching with the alternatives name in the same field.
Modeling these investments poses unique challenges because most of these alternatives are not liquid and do not have pricing data readily available. Advisors are expected to review and override any risk/return inputs by clicking on the security and entering their own return and volatility statistics.
For those alternatives that are not yet incorporated into Riskalyze, we allow you to add them as custom investments.
Methodology for the alternatives that are supported by our system
For all the traditional investments on Riskalyze, we incorporate monthly price data (at a minimum) and dividends from a full market cycle (from January 1, 2008, through yesterday). Most alternatives do not have monthly pricing data and most have not been in existence since January 1, 2008.
Our proprietary methodology for calculating the risk and return profile (return and volatility) for alternatives on our system weights the following data points:
- Track record of share price
- Fees (initial and ongoing management fees by the alternatives managers)
- Liquidity (or lack thereof)
- Dividend or distribution Yield (amount, change and strength of)
- Company track record (or lack thereof)
- The composition of assets owned by the alternative (sector, style, etc.)
PRO TIP: For a deeper dive into Non-Traded REIT Methodology click HERE.
Insights into each component's effect on the return and volatility calculation
- Track record or share price: Our process penalizes alternatives with a decreasing share price and rewards alternative with a stable or rising share price.
- Fees: Our process takes fees into account. Effectively, they offset some of the expected return for the alternative.
- Liquidity: Our process penalizes illiquid alternatives and rewards liquid alternatives. As a strategy nears a liquidity event, the illiquidity penalty decreases.
- Dividend or Distribution Yield: For many of the alternatives on our platform we rely heavily on the stated dividend yield for our return expectation. Alternatives with stable or increasing dividends are rewarded while alternatives with decreasing, unstable or stopped distributions (due to failed strategy) are penalized.
- Company Track Record: Our process provides a very slight reward for managers with a proven track record with a similar alternative and penalizes alternatives from managers that have failed/underperformed in the past.
- The composition of Assets Owned by the Alternative: In cases where we deem the composition as very similar to a publicly traded security (or basket of securities) we reserve the right to use a proxy security or proxy portfolio or some return volatility statistics from said proxy. For example, a BDC holding a diverse portfolio of floating rate funds may best be modeled using proxy ETFs in the floating rate sector.