Alternative Investments Can Be Smart For Certain Portfolios

September 7, 2013
by Michelle Perry Higgins

Start Shopping for Long-Term-Care Insurance at 45Do you recommend individuals hold “alternative” investments? And if so, which ones?

I believe that “alternative” investments can be a strong choice for certain portfolios. Throughout history, we have seen periods where alternatives have had a low correlation to traditional assets, thus lowering risk and increasing diversification. However, it is important to note that these investment choices are typically more complex, can have higher fees, offer less liquidity and may frustrate investors in good market times. Because these investments are nontraditional by definition, alternatives are not a one-size-fits-all solution. It would therefore take a thorough understanding of an investor’s risk tolerance, long-term goals and objectives before making a recommendation.