Fred Hubler’s article looks at how high-net-worth investors are increasingly diversifying beyond traditional stocks and bonds into alternative investments such as private equity, venture capital, private credit, real estate, hedge funds, commodities, and tangible assets like art and collectibles, while weighing the risks, rewards, and liquidity of these investments.
He explains that alternatives often have a low correlation with traditional assets, meaning their price movements aren’t closely tied to stock and bond markets, so they may hold or even gain value when traditional assets decline, helping reduce overall portfolio volatility.
Hubler points to private equity as an example, noting it can offer higher risk-adjusted returns than public equity, especially in volatile markets, since most private equity holdings are in private (or soon-to-be-private) companies. He adds that a significant stock market decline can actually benefit private equity funds, since it lets them acquire companies at lower prices to turn around.
Worth remembering: alternatives don’t just diversify a portfolio – some, like private equity, can actually benefit from the very market downturns that hurt traditional stocks.
The full piece is up on Forbes: Maximizing Diversification With Alternative Investments For Stronger Portfolios.