When considering investing beyond traditional stocks & bonds, analyzing alternatives in a portfolio may enhance returns and manage risk. Depending on the type of investment, it’s essential to evaluate their characteristics and possible benefits which may include:

Diversification: Alternative investments typically have lower correlations with traditional assets like stocks and bonds, helping reduce overall portfolio volatility.

Potential for Higher Returns: Alternatives can offer the potential for solid returns with varying levels of risk.

Risk Management: Alternatives can serve as a hedge against risks like inflation, currency fluctuations or market downturns due to their distinct risk-return profiles. This can make them a valuable part of your risk management strategy.

Access to Unique Opportunities: Alternative investments provide access to sectors or strategies not available through traditional investments vehicles.

Liquidity Considerations: Many alternative investments have limited liquidity and can require longer-term capital commitments. This requires careful planning for liquidity and cash flow management.

Due Diligence and Monitoring: Manager due diligence is crucial in selecting alternative investments. Factors like fund managers’ track records, fees and liquidity terms are important considerations.

Regulatory and Tax Implications: Alternative investments often have specific regulatory requirements and may be subject to specific tax treatments. It’s important to understand how these impact your overall investment strategy and financial planning.