Alternatives: Time for a Rethink?

A $17 trillion boom in alternative assets (“alts”) opens the floodgates of the asset management industry’s next big product push. For advisors, rapid changes in the industry landscape should occasion a rethink.

Today, a deluge of novel products and vehicles have made the so-called “endowment model” available for the first time to new groups, notably the individual investor. Alternatives broadly now encompass a $17 trillion market; data provider Preqin forecasts $12 trillion in growth by 2029, with the majority of those dollars coming from retail channels. This trend, as reported by The Wall Street Journal and Financial Times, is reinforced by the Trump administration’s support for private investments being made available to U.S. retirement plans.

Voices skeptical of this marketing boom, such as veteran investment consultant Richard Ennis, have recently reemerged. Alternatives have long been touted as a panacea for low bond yields, volatile equity markets, and increasing correlation in traded securities. The reality is never that simple. Today’s skeptics worry that first-time investors in alternatives are not paying close enough attention to the potential agency problems and weak governance that can pervade many of the complex, obscure structures found in private markets. These critics argue that the alts industry takes advantage of mystique, opacity, and complexity to drive up costs beyond what would be justified by returns. Such warnings are both timely and fair, especially when it comes to the mass proliferation of low-quality, high-fee private investment products. But the problem isn’t alternatives per se. It is how they are being used, and by whom.

At HB Wealth, we believe that illiquid private investments can play an important role in client portfolios and deliver durable alpha. But finding these opportunities requires patience and a great deal of work— work which is of a fundamentally different character than picking securities or funds.

• We exercise great care in identifying strategies with underlying return drivers uncorrelated to traditional markets;
• We focus on smaller, hard-to-access areas that are off the radar of most mainstream investors;
• We only invest where we believe we have sustained information and network distinction; and
• We believe discipline and diligence, rather than scale, are a key differentiator.

This approach is core to our investment approach across private equity, private credit, and private real assets.

To read more, please download the whitepaper.

If you have any questions regarding private alternatives, please send an email to info@hbwealth.com or call 404.264.1400.

Important Disclosures

This article may not be copied, reproduced, or distributed without HB Wealth’s prior written consent and is intended to accompany a consultation with a representative of HB Wealth.

Specific investments described herein do not represent HB Wealth’s investment decisions. The reader should not assume that investment decisions identified and discussed were or will be profitable. Specific investment advice references provided herein are for illustrative purposes only and are not necessarily representative of investments that will be made in the future.

Please discuss any questions you have regarding the content of this presentation with an HB Wealth representative.

These materials are provided for informational purposes only and all services described may or may not be ultimately provided to each client depending on their personal situation, needs, and net worth.

Past performance is no guarantee of future results, and no investment strategy can guarantee profit or protection against losses.

Certain information contained in these materials may constitute “forward-looking statements” and/or may be obtained from, or based on, third-party sources that HB Wealth believes to be reliable. No representations or warranties are made as to the accuracy or completeness of such statements, and actual events or results may differ materially from those reflected or contemplated. Opinions and analysis offered constitute HB Wealth’s judgment at the time of publication and are subject to change without notice.

Investing involves risk, including loss of principal. Past performance does not guarantee or indicate future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. Private alternative investments are not for every client. An individual must be qualified to invest in a private investment based on their net worth and/or other criteria, and they may qualify to invest in some alternative investments while not be allowed to invest in other alternative investments. Alternative investments are not risk-free and there is no guarantee of achieving attractive performance compared to similar liquid investments. Alternative investments are highly illiquid, and any potential investor should consider their liquidity needs prior to making an investment.

This presentation does not constitute an offer/solicitation/recommendation to sell or purchase any security.

For a description of the qualifications for the CFA designation, please visit our website https://hbwealth.com/privacy-policy-disclosure/.

Additional information regarding our privacy policy and important disclosures can be found on our website at https://hbwealth.com/privacy-policy-disclosure/.

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