Industry Trends

Non-Retail Investors are moving increasingly beyond the traditional portfolio and warming
to more alternative asset allocations. The group is moving away from the traditional 60/40
portfolio to a 50/30/20 model, including alternative investments.

Non-Retail Investors Embrace Alternative Investments: Diversifying Portfolios for
Enhanced Returns

Introduction:
In the ever-evolving landscape of investment strategies, non-retail investors are charting
a new course. They are increasingly veering away from the conventional 60/40 portfolio
and embracing a more dynamic 50/30/20 model that incorporates alternative investments.
This shift represents a paradigmatic change, underscoring the recognition of the benefits
that alternative assets bring to the table. In this article, we will delve into the advantages
of diversifying portfolios with alternative investments and why this trend is gaining traction
among astute investors.

• Diverse Opportunities, Enhanced Returns:

One of the primary advantages of incorporating alternative investments lies in the expanded universe of opportunities they offer. Unlike traditional asset classes such as stocks and bonds, alternative investments encompass a wide array of options, including private equity, real estate, commodities, and hedge funds. By venturing into these diverse arenas, investors can tap into previously untapped potential for enhanced returns.

• Risk Mitigation through Diversification:

The adage “don’t put all your eggs in one basket” holds true in the world of investing.

Diversification is a time-tested strategy to mitigate risk, and alternative investments
provide a valuable means to achieve this. By spreading investments across different
asset classes with low correlation to each other, non-retail investors can buffer their
portfolios against market volatility and economic downturns.

• Resilience in Turbulent Times:

Alternative investments have demonstrated their resilience in the face of economic crises
and market turbulence. During times of uncertainty, assets like real estate and
commodities have historically shown a tendency to remain more stable or even
appreciate in value. This stability can provide a crucial cushion for investors, helping them weather storms that might severely impact more traditional investments.

• Access to Unconventional Insights and Expertise:

Alternative investments often grant access to specialized expertise and insights that may
not be readily available in the mainstream market. Investing in private equity, for example,
allows investors to partner with experienced professionals who possess deep industry
knowledge. This insider perspective can unlock unique opportunities and offer a
competitive edge in the pursuit of higher returns.

• Inflation Hedging Capabilities:

Inflation is a concern for investors seeking to preserve the real value of their wealth over
time. Alternative investments, such as real assets like real estate and commodities, have
demonstrated the potential to act as effective hedges against inflation. These tangible
assets tend to appreciate in value over time, providing a safeguard against the erosive
effects of rising prices.

• Enhanced Portfolio Liquidity:

While some alternative investments may have longer holding periods, others, like certain
hedge fund strategies, offer the advantage of greater liquidity compared to traditional
investments. This flexibility can be invaluable, allowing investors to adapt to changing
market conditions or capitalize on emerging opportunities.

Conclusion:

As non-retail investors continue to shift towards a 50/30/20 model with alternative
investments, they are poised to unlock a new realm of possibilities. The benefits of a more
diversified portfolio are evident, from enhanced returns and risk mitigation to resilience in
turbulent times. By incorporating alternative assets, investors position themselves
strategically to navigate the complex landscape of modern finance. Embracing this
paradigm shift is not only a prudent decision, but it also represents a forward-thinking
approach to securing a more robust and resilient investment future