Expert outlooks reinforce the case for alternatives

With market stress and volatility in the forecast, alternatives may help provide needed diversification

Time to read: 3 min

For almost a decade, we have witnessed a historic bull market characterized by high equity returns, low volatility and low interest rates. In my opinion, it seemed like most investors believed all that was needed to be successful was to pile into equities and not worry about diversification (or anything else, for that matter). Frequent readers of my blogs know I have been cautioning investors to prepare for lower equity returns, increased volatility and rising interest rates. I’d like to share three recent news stories that share a similar view of the markets. Given the increasing prevalence of this view, investors may wish to consider alternative investments.

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‘Tis the season for diversification

Equity markets send a timely reminder about diversifying into alternatives

Time to read: 3 min

This fall has been a challenging season for equities. In October, the S&P 500 Index declined approximately 9%,1 while volatility, as represented by the VIX Index, more than doubled.1 And November hasn’t been much better, with some stock indexes approaching double-digit losses for the year as we enter December.2 This behavior serves as yet another reminder that equity markets are often volatile and can go down just as easily as they can go up. Given this recent and vivid demonstration, I believe investors (and their portfolios) should consider the potential benefits of allocating to alternatives.

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Alternative investments for the real world

How alternative investments may complement different portfolio objectives in various market environments

Time to read: 3 min

My last four blogs have defined alternative investments, explained why I believe investors should consider them, discussed performance expectations and outlined how to deploy alternatives in a portfolio. In this final installment of my series, I will apply these lessons to the current volatile market environment and discuss which alternatives may be able to help in various scenarios.

Below, I’ve listed several common investor portfolio objectives. While there are no guarantees that performance will meet expectations, each objective is paired with an alternative strategy that may help investors meet specific goals. 

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Selecting an alternative strategy

How to incorporate alternatives into a portfolio

Time to read : 4 min

I’ve written this summer about the potential benefits of alternative investments. Let’s assume that readers of my previous blogs agree that my ideas have some merit and it is time to diversify into alternatives (alts). The devil is always in the details. Of all the different alt funds available, which is best for a given investor? And where does it fit in a portfolio? In this blog, the fourth in my series explaining the basics of alts, I will suggest a process that may help investors select the best alternative strategy for their objectives.

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How alternative investments may help improve returns while reducing risk

What to expect from the performance of alternatives

Time to read: 2 min

Given the market turbulence experienced so far in 2018, I am not surprised that interest in alternative investments (alts) has picked up. For anyone trying to figure out how to incorporate alternatives into a portfolio, it’s critical to have proper expectations about their performance and how that might differ from traditional equities and fixed income.

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