Stock markets keep reaching new record highs, but for how much longer? Contrast this with record low yielding bonds. This leaves investors, who don’t necessarily want the risk of an inflated market nor having their principal eroded through inflation, with few decent options in the traditional marketplace. Fortunately, there are options and we’d like to take some time discussing them. This month, we’re talking about Alternative Investments or as we like to call them Non-Traditional Investments. NonTraditional Investments have long existed but too few investors know about them or perhaps more accurately, know how to access them.
First off, what are non-traditional investments? NonTraditional investments are fairly broad in nature and typically include investments outside the scope of the traditional bond and stock markets; they generally do not trade on public exchanges. Some common examples include: private debt, real assets, commodities, private equity, and infrastructure projects. Non-traditional investments are often characterized by high yields, high returns, or both and they generally do not react in the same way as traditional investments to the ups and downs of the bond and stock markets.
For quite some time, large pension and endowment institutions have recognized the need to include non-traditional assets in their investment strategies. However, many investors have not been afforded the same opportunities due to common restrictions such as limited availability, large minimums, complexity, and long lock-up periods. In addition to overcoming these hurdles, the world of non-traditional instruments is broad, diverse and can be difficult to navigate.
We have been able to circumvent these same issues as a licensed Investment Funds Manager and Portfolio Manager. Our Pooled Fund Structures enables us to take advantage of the many opportunities in this complex arena while employing rigorous due diligence and analysis.
If you don’t already have non-traditional investments in your portfolio, don’t panic. Speak with your Investment Manager to see whether they have access to nontraditional investment opportunities. The uncorrelated volatility of non-traditional investments in relation to your traditional stock and bond portfolio is a compelling reason to include them in a diversified portfolio. Especially during these times of uncertainty, attention and dedication must be put toward seeking investments that perform, regardless of the traditional marketplace.