Introduction to Alternative Investments at Schwab including Schwab platforms and Custody Services

Introduction to Alternative Investments at Schwab including Schwab platforms and Custody Services

Alternative investments are a type of investment providing diversification benefits and opportunities for your clients. Schwab’s alternative investment platforms support a wide range of products.

The Schwab Alternative Investment OneSource® platformProvides enhanced custodial and shareholder services to investors, including integrated tax reporting* and trade confirmations in certain non-listed, alternative investment products.
The Schwab Alternative Investment Marketplace™ platformProvides you with access to third-party platform sponsors, who offer menus of private funds.
The Schwab Alternative Investment Access® platformProvides eligible advisors and eligible clients the ability to invest in certain private investments designed for sophisticated high net worth investors. Contact AIAccess@Schwab.com for information.
Schwab Alternative Investment Custody ServicesProvides advisors with additional choice and flexibility to invest in securities that are not available on one of the platforms and manage these investments alongside the advisor's clients' traditional assets.

Alternative investments are financial assets not part of conventional investment categories such as listed stocks, bonds, or cash. Investing in alternative investments is risky and is not suitable for all investors. Registered and unregistered alternative investments are not subject to the same regulatory scrutiny as mutual funds.

CategoryDescriptionBenefits offeredRisk involved
Non-Registered pooled funds (hedge funds, hedge fund of funds, commodity pools, etc.)
  • Professionally managed pooled funds with significant investment strategy flexibility, including the ability to use leverage, to short, or to take derivative positions with the goal of generating high returns.
  • There are many different types of funds, including absolute return funds, directional hedge funds, opportunistic funds, and more.
  • Professional management
  • Potentially uncorrelated returns
  • Diversification
  • Potential loss of principal
  • Liquidity risk
  • Manager risk
  • Valuation risk
Real estate investment trusts (REITs)
  • Companies owning and, in most cases, operating income-producing real estate such as apartments, shopping centers, offices, hotels, and warehouses. 
  • Some also engage in real estate financing.
  • Generally stable dividend income
  • Inflation protection
  • Diversification
  • Liquidity 
  • Professional management
  • Based on underlying portfolios of real estate properties subject to market fluctuations due to interest rates, rental and leasing demands, property valuations, vacancies, and other economic factors.
Publicly registered entities
  • Professionally managed, publicly registered, pooled funds with significant investment strategy flexibility, including the ability to use leverage, to short, or to take derivative positions with the goal of generating high returns.
  • Many different types of funds, including multi-strategy, global long/short, managed futures, and more.
  • Professional management
  • Potentially uncorrelated returns
  • Diversification
  • Potential loss of principal
  • Liquidity risk
  • Manager risk
Private equity (Private stock)
  • A private equity investment will generally provide working capital to a target company for expansion, new-product development, or restructuring of the company's operations, management, or ownership.
  • Private equity may be issued to owners of a closely held business.
Potentially uncorrelated and higher risk adjusted returns
  • Potential loss of principal
  • Liquidity risk
  • Valuation risk

Contact your AS Service team if you have an alternative investment you would like to have held in your clients' accounts to determine if the security has already been reviewed and accepted for custody at Schwab or if you will need to submit a Custody Review Request.

How to initiate a transfer or purchase for Schwab Alternative Investment Custody Services
How to invest in a product available on the Schwab Alternative Investment Marketplace platform
How to subscribe to an investment available on the Schwab Alternative Investment OneSource® platform
Introduction to Schwab Alternative Investment Custody Services
 

Schwab does not provide investment advisors, or their clients, advice or make recommendations about potential investments in any funds on the Schwab Alternative Investment OneSource platform, Schwab Alternative Investment Access platform, funds made available on third-party platforms that participate in the Schwab Alternative Investment Marketplace platform, and funds that may be held in custody. It is each investment advisors responsibility to determine the suitability of such an investment for its clients. Alternative investments are risky and an advisor's clients may lose their entire investment in a fund.

This is not an offer of, or a solicitation to subscribe to or purchase, securities. Investing in alternative investments is speculative, not suitable for all clients, and generally intended for experienced and sophisticated investors who are willing and able to bear the high economic risks of the investment. Investors should obtain and carefully read the related prospectus or offering memorandum, which will contain the information needed to help evaluate the potential investment and provide important disclosures regarding risks, fees and expenses. 

For K-1 reporting funds, Schwab only reports redemptions via a 1099-B.

* Schwab receives remuneration from fund companies participating in the Schwab Alternative Investment OneSource platform for recordkeeping, shareholder services, and other administrative services.
 
Schwab receives remuneration from third-party platform sponsors participating in the Schwab Alternative Investment Marketplace platform for recordkeeping, shareholder services, and other administrative services.
 
Clicking on the Schwab Alternative Investment Marketplace link on this page will navigate you to another page on Schwab Advisor Center. That page contains a link that will take you to a third-party website or tool. Third-party platform sponsors and independent investment advisors are not owned by, affiliated with or supervised by Schwab.

Schwab is acting as a placement agent for the investments in the Schwab Alternative Investment Access platform and receives a fee from the fund or its manager in connection with any investment. Schwab may also receive other remuneration for recordkeeping, shareholder services, and other administrative services.

When accepting an alternative investment, Schwab has neither endorsed nor approved the investment and Schwab's acceptance of the investment into custody indicates solely that the investment meets the criteria of Schwab's existing systems and procedures, and that the acceptance in no way can be construed to be either an endorsement or evaluation of merit of any kind or an acknowledgment that the investment complies with any sanction, legal authority, or regulatory statute.
 
Third-party firms and their employees are not affiliated with or employed by Schwab. Their mention should not be construed as a recommendation, endorsement, or sponsorship by Schwab. The views expressed are those of the third-parties and are provided for informational purposes only. The experiences shared are no guarantee of future performance or success and may not be representative of you or your experience.

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