When you write about U.S. stocks as much as I do, you tend to forget about the many other investment ideas available to retail investors in this country. There are plenty. 

In recent years, the private capital markets have grown in stature and popularity. That’s evident by the big move by pension funds into private equity and other so-called alternative assets. 

According to the Global Pension Assets Study – 2024, the percentage of pension fund assets invested in public equities dropped from 50.7% in 2003 to 41.6% in 2023. Over these 20 years, the allocation to alternative assets rose 840 basis points to 20.1%.

For investors looking for quality information about the various asset classes, the Bank of America (NYSE:BAC) quarterly chart book for institutional investors is chock-full of information. 

For example, the Q3 2023 chartbook examines the risk and returns of various private and public asset classes between July 2005 and March 31, 2023. Private credit had the best return with the least volatility, public equities had the best return with the most volatility, while private equity fell between the two. 

Based on these findings, here are my three best investment ideas.

Ares Capital Corporation (ARCC)

Representing the private credit asset class, Ares Capital Corporation (NASDAQ:ARCC) is a business development company, or BDC, and one of the largest direct lenders in the U.S. 

ARCC is externally managed by Ares Capital Management, an investment adviser owned by alternative asset manager Ares Management (NYSE:ARES). It invests in the “middle market,” defined as companies with annual EBITDA — or earnings before interest taxes, depreciation and amortization — between $10 million and $250 million. 

Its investments range from $30 million to $500 million, and a good portion are first-lien senior secured loans and second-lien senior secured loans. It also invests in subordinated debt, which can include common and preferred equity.

On May 1, the BDC reported its Q1 2024 results. Investors shouldn’t put much stock in the income statement because it varies from quarter to quarter, based on realized and unrealized gains. Excluding these, its core earnings per share were $0.59, two cents higher than a year earlier. 

More importantly, its net assets per share were $19.53, up from $19.24 at the end of December. The fair value of its portfolio of investments as of March 31 was $23.12 billion, up from $22.87 billion at the end of December. 

Yielding 9.1%, its annualized total return over the past five years was 11.22%. If income is your thing, ARCC is an excellent way to play private credit. 

Blackstone (BX)

Blackstone (NYSE:BX), the world’s largest alternative investment management company, represents alternative assets with $1.06 trillion in Assets Under Management as of March 31. Those assets are divided among four buckets: Real Estate, which constitutes 32% of AUM, Private Equity at 29%, Credit & Insurance at 31% and Multi-Asset Investing at 8%.   

When you analyze alternative asset managers, remember that there are many moving parts and metrics to pay attention to. 

For example, the most important metric is the growth in fee-earning assets. In Q1 2024, they rose 7% year-over-year to $781.4 billion. Those assets generated $4.47 billion in revenue in the trailing 12 months ended March 31, 4% higher than a year earlier. 

In addition to the fee-related earnings, there are performance fees for beating their segment’s benchmarks. In the 12 months which ended March 31, they were $1.18 billion, 52% less than a year earlier.

As a result, its segment distributable earnings fell by 17% to $5.65 billion. If its fee-earning assets fell over this period, that might have caused some concern, but that didn’t happen. 

Also, significant are the funds yet to be invested. These are referred to as “dry powder.” As of March 31, it was $191.2 billion, with private equity possessing the most at $80.0 billion.

I could go on and on about its quarterly results. 

Although its shares are flat year-to-date, BX stock is up nearly about 49% over the past year and about 207% over the past five years. 

It’s an excellent proxy for alternative assets.   

Dimensional World Equity ETF (DFAW)

Lastly, representing equities is the Dimensional World Equity ETF (NYSEARCA:DFAW), a global fund from Dimensional Fund Advisors that invests in both developed and emerging markets. The actively managed ETF invests in other Dimensional funds. 

They include Dimensional US Core Equity 1 ETF (NYSEARCA:DCOR), Dimensional US Core Equity 2 ETF (NYSEARCA:DFAC), Dimensional International Core Equity 2 ETF (NYSEARCA:DFIC), Dimensional Emerging Markets Core Equity 2 ETF (NYSEARCA:DFAE) and Dimensional Global Real Estate ETF (NYSEARCA:DFGR). 

The three top ETFs by weight are DFAC at 52.71%, DFIC at 19.54% and DCOR at 17.55%. U.S. equities account for 71.82% of the net assets, international equity at 19.89% and emerging equity at 8.29%. 

Launched last September, it charges a reasonable 0.25% expense ratio, providing investors with a low-cost global equity portfolio. 

What’s not to like? 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.