In the current market, which remains characterized by volatile equity valuations and near-zero interest rates, many investors have turned away from traditional asset classes and looked to alternative investments. However, while alternatives are often positioned to produce higher returns than publicly traded stocks and bonds, they are often less liquid and require investors to tie up their money for a certain period of time. As a result, investors should be sure to conduct thorough due diligence before adding a nontraditional asset to their portfolios. For insights on which alternatives investors may want to consider, U.S. News & World Report recently spoke with Sightline Wealth Management Senior Vice President and Investment Advisor Paul de Sousa.
The first alternative investment de Sousa recommends as a staple in every portfolio for protection against traditional market swings is the gold bullion. “Physical gold represents real money because it can’t be created out of thin air,” he explains. Another benefit of holding gold is its ability to hedge against inflation, which may be a problem down the road.
In addition to gold, another asset class to consider is special purpose acquisition companies, commonly referred to as SPACs or blank-check companies. De Sousa tells the publication that SPACs are now seeing a resurgence with some high-profile managers entering the space.
Lastly, de Sousa discusses private debt, which he says has little correlation to public markets and their volatility. Another benefit of private debt investment is that, despite being illiquid, accredited investors can find loan terms for their desired duration, which grants them the ability to stagger the length of the loan and payout.
Click here to read the entire U.S. News & World Report article featuring Sightline Wealth Management’s Paul de Sousa.