Young, wealthy investors are turning to alternative investments

Young, wealthy investors are turning to alternative investments

More advisors are using alternative investments

Alternative investments typically fall into four categories: hedge funds, private equity, “real assets” like real estate or commodities and pre-packaged investments known as “structured products.”

Amid double-digit losses in the stock and bond markets this year, there’s been an uptick in advisors turning to alternative investments, as planners seek further diversification, according to a recent survey from Cerulli Associates. 

The top reasons for alternative allocations were to “reduce exposure to public markets,” “volatility dampening” and “downside risk protection,” the Cerulli survey respondents said.   

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Scott Bishop, a certified financial planner and executive director of wealth solutions at Houston-based Avidian Wealth Solutions, said some clients use a portion of their portfolios to educate their adult children about investing. And these younger investors are increasingly eyeing alternative assets.

“I think everybody’s very worried about the stock market, and if they’re in their 40s, they’ve probably been burned a couple of times,” he said.

‘Know what you own and why you own it’

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