Alternative Assets: Not Your Grandfather’s Investment Portfolio

Ryan Christine Coulson
Tue Oct 16 13:00:00 GMT 2018

After building a portfolio of traditional stock and bond investments, some investors become curious about including alternative assets in their portfolios for additional diversification benefits. While hedge funds, private equity, and venture capital are investment opportunities often associated with the financial elite, not all alternative assets are reserved for the ultra-wealthy. However,...

After building a portfolio of traditional stock and bond investments, some investors become curious about including alternative assets in their portfolios for additional diversification benefits. While hedge funds, private equity, and venture capital are investment opportunities often associated with the financial elite, not all alternative assets are reserved for the ultra-wealthy. However, like all investments, their benefits come with trade-offs that you should consider before investing.  

Alternative assets can most easily be described as any investment that does not neatly fit into the category of traditional stocks and bonds. Real estate, precious metals, and other physical assets fall into this asset class along with a variety of hedge fund and private investment strategies. Because these assets allow for more flexibility than traditional investments due to less regulation and oversight, they often offer the potential for higher investment returns. However, these investments also come with additional risks related to transparency and liquidity. For example, some alternative assets may not be appropriate for investors who need immediate access to their cash. 

Today, mutual funds and other pooled investment vehicles are emerging, making alternative strategies accessible to a wider audience. These investment solutions can provide many of the same benefits as true alternative assets while dampening the associated risks. If you are curious about how alternative assets may benefit your investment portfolio, speak with your financial advisor. Understanding the types of alternative assets available, how they work, and who they are appropriate for can help you decide whether these strategies may help you reach your financial goals.

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Ryan Christine Coulson is a senior wealth strategist for CIBC Private Wealth Management's San Francisco office, with 14 years of industry experience. In this role, Ryan is responsible for developing integrated wealth management solutions, providing comprehensive estate and financial planning services to high net worth clients, as well as serving as a fiduciary representative for individual trusts and foundations.