At Alitis, we do not rely solely on stocks and bonds when constructing portfolios.
Over the past thirty years, a traditional allocation to stocks and bonds in a balanced portfolio has in most cases delivered acceptable long-term returns.
There are indicators that this traditional 60/40 approach may be coming to an end.
- Interest rates are near historical lows and starting to rise,
- Stock markets have reached record highs in the last 10 years and the last two bear markets were larger than previously seen, and
- There are new risks such as geopolitical tensions, cyber security risks and record levels of consumer debt in the North American market.
As portfolios are migrating from low-yielding fixed income investments to publicly-traded stocks, the higher valuations for stocks cause investors and investment managers serious concern.
We believe that success in this New Paradigm requires innovation that challenges conventional investments we were previously comfortable with. For retail investors, this is a New Paradigm. But the fact is that including Alternative Investments is not new at all. It’s been used for decades by institutional investors and wealthy families. These astute investors have altered their asset mix to include meaningful allocations to Alternative Investments to reduce risk and deliver total return.
So the Alitis approach is not new, it’s just new to the retail investment world. We’re bringing the High Net Worth approach to a broader Canadian market with our intelligently-built real estate and mortgage Funds, making them easy to recommend.
Displayed below are the strategic asset allocations for some of the largest institutional funds in the world, highlighting their sizeable allocations to non public-investments.
Instead, we start with a small base of stocks and bonds and then carefully add a chosen mix of alternative investments, with a focus on diversification and downside protection.
These alternative investments can diversify risks, significantly dampen portfolio volatility, and offer the potential for higher returns over the long term.