The rules of the market are constantly evolving, yet many investors are still building their portfolios on the traditional allocation of stocks, bonds and cash. Unfortunately, this asset allocation strategy no longer provides the hedge against market volatility that it used to provide years ago. For example, fixed income assets, such as bonds, no longer reliably offer a buffer when equities fall. Instead, bonds have become more correlated to equities over time, and experts are now recommending that investors begin incorporating alternative assets into their portfolios to account for this trend.
To learn more about this modern approach to asset allocation and the potential benefits that may come with it, the Financial Post recently spoke with Sightline Wealth Management.
“Alternative investing offers meaningful diversification in today’s economic and investment climate,” says Sightline Wealth Management Senior Vice President and Investment Advisor Paul de Sousa. This is largely due to the fact that alternatives are typically uncorrelated to stock and bond market performance, allowing investors to avoid high-risk markets and receive steadier returns than most public-market securities.
While the risk-return profile of alternative investments is favorable, individual investors have been slow to recognize the opportunity largely because it has not been made widely available. As a result, de Sousa stresses that investors interested in incorporating alternative assets into their portfolios should not attempt this venture alone.
“What’s critical, though, is getting assistance from a professional licensed advisor to provide advice on alternative assets,” he explains. “As advisors specializing in this area, we have the experience and acumen to help clients determine their sweet spot for alternatives in a portfolio.”
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