Omnia Family Wealth discusses the role of alternatives within a portfolio

Summer, 2017

In an Asset TV interview, Omnia Family Wealth Founder and CEO Steven Wagner discusses the role of alternative investments within a portfolio, and why these investments have become an attractive component for the investment portfolio.

When evaluating the merit of any given investment, investors must first consider, “What role does this investment play in my portfolio?” Every investment within a portfolio must perform a function in the overall allocation, as it relates to the other investments within the portfolio. When evaluating the relationship between stocks and bonds, it becomes evident that investors may need additional diversification to soften volatility, especially as these investments become more correlated over time. Assets that act independently of equity and fixed income markets are critical, particularly as interest rates are anticipated to rise, however gradually.

An ideal place to find these uncorrelated investments is within the hedge fund and alternative investment space. While these investments can provide critical diversification, it is not easy to find alternative managers who have proven performance track records that warrant the 2 and 20 fee structure. These managers can be hard to uncover. As the alternative investment landscape becomes more commoditized and saturated, it becomes a significant challenge for families to identify managers who offer enhanced returns and diversification. Thorough manager research is critical.

Before families invest in alternative investments, they should first ensure they are able to embrace illiquidity, ensure methodical and objective due diligence and work with a firm that can provide transparent guidance every step of the way.

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