Smells like teen spirit: A look at alternative investments

Welcome to the Making Margin podcast! Greenway’s team is here to discuss common financial mistakes and to help you navigate them. 

Meet the voices behind this episode of Making Margin:

• Nick
• Allie
• Jeff

Today’s topic is all about alternative investments.

• For some time now, university endowments have included alternative investments in their portfolios attempting to both diversify their risk, and increase their return on investment.
• Most have been unsuccessful in actually increasing their returns, and according to a recent report, that lack of success is in direct proportion to the percentage of alternative investments in the portfolio
• Should individual investors hold alternative assets, or are plain vanilla portfolios just fine?

Discussion Topics:

• Traditional asset classes
  • Stocks, Bonds, & cash
• Alternative assets
  • Commodities
  • Real estate
  • Master limited partnerships (mostly in the energy industry)
  • Private equity
  • Hedge funds
• In theory, who might be a good fit for alternative asset classes? What’s the potential benefit?
  • Wealthy investors
  • Large endowments/non-profits
• In reality, what have the drawbacks been?
  • Lower return, Higher cost, & Dependence on manager selection
• Do we hold any ‘alternative’ assets in our client portfolios?
  • closest we get is REITs
• Do people need the additional diversification benefit that alternatives bring?
  • Mostly no

Take Away: A plain vanilla portfolio may be just what you're looking for.

References: 
https://bit.ly/3evtgL1 
https://bit.ly/3mZFm1M