Alternatives

The way we think about alternatives.

Most people are familiar with stocks, bonds, and cash in the investment world. However, there are some assets that don’t fit nicely in one of those three conventional categories, and we refer to those as alternative investments. Think: venture capital, real estate, or hedge funds, for example. Because they are inherently different from traditional asset classes, with them comes a unique kind of diversification that can be appealing.

Some advisors tend to believe that alternatives are a panacea for diversification, risk management, and enhancement of returns, while other advisors believe that they are expensive and ineffective. 

At H&R, we believe that although alternatives aren’t appropriate for the majority of clients, for some clients, certain alternative investments can be a prudent addition to a portfolio. Such clients are generally ultra high net worth individuals or endowments for whom liquidity is not a concern.

In our approach to alternative investments, we carefully assess how an investment might fit with the client’s other holdings and long-term objectives, make sure the client is being compensated for the illiquidity of the investments, and monitor the unique risks associated with these non-traditional investments.