Our Investment Approach 3: Liquid Alternative Assets

Genevieve Signoret

(Hay una versión en español de este artículo aquí.)

This is the the last post in our three-part series on our investment approach. Click here to read Part 1, where we lay out our general approach to building the equity portions of our portfolios, or here to read Part 2, where we describe how we allocate the fixed-income portions.

What do we mean by the phrase “liquid alternative assets”?

Any publicly traded asset that is not a stock or plain-vanilla bond is a “liquid alternative asset” for us.

“Liquid” here means publicly traded.

We stipulate “liquid” because often what people call alternative assets includes assets not publicly traded, such as private real estate, shares in private capital funds, and investments in startups or other closely held companies.

Long positions only

Our client portfolio positions in liquid alternatives are long only.

What liquid alternative assets do we buy?

Not all our portfolios hold liquid alternative assets, but those that do always as their core allocation a position in US or international real estate (property) trusts, or REITs.

When our models signal good value and strong upward momentum for energy infrastructure REITs, commodity derivatives, or both, we also add these in. To do so we cut back on our core allocation (property REITs).