Alternative investments, also referred to as non-traditional investments, include all investment types other than stocks, bonds, or cash, and aim to deliver returns that have little to no correlation to these traditional asset classes. Common forms of alternative investments used in Canada today include mortgage investments, private real estate, private equity, and liquid alternatives, however, there are many other types which are less common. Alternative Investments can dramatically improve the risk-return profile of a portfolio are fast becoming, essentially, a requirement for a properly constructed portfolio.
Why Include Alternatives In A Portfolio?
Competitive Risk-Adjusted Returns
Standard Deviation and Sharpe Ratios help quantify return as a function of risk. As Investment Advisers, you know that the vast majority of investors prefer steadier returns with less volatility and potential loss.
“Don’t put all your eggs in one basket”. Traditional diversification has resulted in many advisors and their clients having too much of their money in one asset class, publicly-traded stocks.
Portfolio Managers gain greater flexibility to innovate when they can use private investments, real assets, derivatives, options and prudent leverage. You want to align yourself with Portfolio Managers who know how to take advantage of this flexibility.
Alternatives behave differently than the stock market due to their uniquely low or negative correlation to publicly-traded stocks and bonds. Knowing ahead of time how a manager has performed in all types of markets is important.
Globally, institutional investors are moving away from the traditional 60/40 model and using Alternative solutions to meet their risk and return objectives.
Because private investments and most derivatives-based absolute return strategies have little or no correlation to publicly-traded stocks and bonds, the addition of Alternatives to a client’s portfolio can significantly reduce the risk of your clients experiencing the full drawdown of a Bear Market.
Alitis’ Alternative Investments
As an experienced manager with Alternative investments, Alitis has brought a suite of well-built Alternative Funds to the Canadian marketplace that are designed to deliver stable returns regardless of what interest rates or stock markets do. Investors and their Advisors can have confidence that these investment solutions are built to meet their income and growth targets for their portfolios. Alitis currently offers three alternative portfolios: Alitis Private Mortgage Fund, Alitis Private REIT and Alitis Private Real Estate Limited Partnership.
Benefits Of Mortgage Investments As An Asset Class
- Inflation Hedge
- High level of Income
Benefits Of Real Estate As An Asset Class:
- Inflation Hedge
- Capital Appreciation
- Steady Cash Flow