Why alternative investments deserve a place in your portfolio

Simply put: they help improve risk-adjusted returns.

Historically, alternatives—private real estate, private equity, private infrastructure, private credit, venture capital— were reserved for endowments, pension funds, family offices and the ultra-high-net-worth.

High minimums, high fees, cumbersome commit-and-call structures, and 7–10 year lockups.

Over the past decade, alternatives have undergone a democratization.

Today, high-quality institutional alternatives are increasingly available to high-net-worth, and even mass affluent investors. 

Lower minimums, lower fees, and easy to implement evergreen structures.

That said, alternatives are not without risks. They’re illiquid, more complex, and more expensive than traditional publicly traded securities. Success depends on manager selection and knowing how, when and where to implement.

In public equities, the gap between a top-quartile and bottom-quartile manager may be a couple percentage points. In alternatives, that spread can be upwards of 20%.

When used thoughtfully as a complement to stocks and bonds, alternatives can improve diversification, reduce volatility, and enhance returns.

Preserve Private Wealth is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specic securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.