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Alternative Investments

Submitted by Brian.Lavelle on November 9, 2017

Alternative investments increasingly have become an important component of many investors’ portfolios. Schwab provides advisors access to a growing list of alternative investment funds with low fund minimums and makes incorporating these products seamless with streamlined execution. For alternative investments selected from the Schwab platform, we offer consolidated reporting, efficient tax filings, and the dedicated support of our experienced Alternative Investment Service Team.

Schwab’s alternative investment custody solution provides advisors with additional choice and flexibility to invest in securities that are not available on one of our platforms.

Efficiently build diversified portfolios

brings the choice, transparency, convenience, and cost-effectiveness you expect from Schwab to alternative investing.

Use the platform to identify and select alternative investments from a growing list of funds issued by many well-known asset managers encompassing hedge fund, private equity, real estate, and alternative income strategies. The low fund minimums and access to a wide range of strategies enable the creation of diversified portfolios for investors of all levels of wealth and investment sophistication. Additionally, Schwab has simplified the investment process from start to finish, including:

  • Accessibility to available fund information, including fund profiles and subscription documents on Schwab Advisor Center®
  • Execution of subscriptions through Schwab, as trades and the position will automatically appear on Schwab account statements 
  • Reporting of most funds on 1099s, included on the consolidated Schwab-issued 1099 to simplify the tax-filing process for your clients

Consolidate a portfolio by custodying other alternative investments at Schwab

Many alternative investments that are not part of the Alternative Investment OneSource or Alternative Investment Access platforms can be held in custody at Schwab and managed alongside the rest of a portfolio. Acceptance of these investments is subject to a simplified asset acceptance review process. In general, Schwab accepts the following asset types:

  • Onshore and offshore hedge funds
  • Domestic and offshore hedge funds of funds
  • 1933 Act-registered non-traded REITs
  • Private equity funds and fund of funds
  • Other third-party pooled investments
  • Certain private stock

If a security doesn’t meet Schwab’s asset acceptance criteria, it may be held with one of Schwab’s preferred alternate custodians. For additional insights into holding alternative investments at Schwab, refer to the section of our Service Guide.

Streamline processing with the Alternative Investment Products service platform

Securities offered by firms participating in the Depository Trust & Clearing Corporation (DTCC)  Alternative Investment Products (AIP) services platform are eligible for an expedited review process. Run by the DTCC, AIP is a data-transmission platform that links administrators, broker-dealers, custodians, and issuers of alternative investments to support streamlined processing of pooled investments, such as hedge funds, funds of funds, private equity, REITs, and limited partnerships.