FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
March 22, 2022

IN THIS ISSUE:

1. Traditional 60/40 Stock/Bond Portfolio Falling Out of Favor

2. What Are Alternative Investments & How Do They Work?

3. Alternative Investments Available to Individual Investors

4. Special Report: “How To Invest Like An Institution”

Overview – 60/40 Stock/Bond Portfolio Falling Out of Favor

For over 70 years, the 60/40 portfolio – consisting of 60% equities and 40% bonds/fixed income – was the “go-to” strategy for financial planners and Registered Investment Advisors to provide attractive performance returns and reduced risk to their clients over time.

Over the last few years, however, with the long decline of interest rates to historic lows, more and more investment professionals are questioning whether the 60/40 strategy is still appropriate – and maybe even too risky with stocks at nosebleed levels and interest rates with nowhere to go but up.

As a result, financial planners and Advisors have been shunning 60/40, or at least adding more asset classes to the mix, over the last several years. Investment professionals are increasingly turning to so-called “Alternative Investments” which are not highly correlated with stocks and bonds.

At Halbert Wealth Management (HWM), we have been into Alternative Investments since our very founding in 1995. We’ve sought out the most successful professional money managers who offer alternative investments and as a result, we have an enviable selection of successful alternatives to help our clients diversify their portfolios.

Put differently, while the rising interest in alternative investments is the latest fad among many financial planners and Investment Advisors, we at HWM have been doing it for over 25 years. As a result, we are uniquely positioned to help you diversify your portfolio into Alternative Investments – if we haven’t done so already.

Today, we’ll take a detailed look at Alternative Investments, which asset classes qualify as Alternatives and how we help you determine which of these strategies fit your goals and risk tolerance. While we’ve been doing Alternative Investments for 25 years, many advisory firms are just getting into this arena with a hefty learning curve ahead of them. Let’s get started.

What Are Alternative Investments & How Do They Work?

Since a lot of firms are just breaking into this area, many will tell you there are only five to six Alternative Investment strategies. Those would include:

At Halbert Wealth Management, we offer Alternative Investment strategies in some of the above areas, but we also sponsor Alternatives in several other creative areas which provide more opportunities for added diversification. Those include:

These additional strategies not only offer our clients more diversification, they also provide more exposure to asset classes which are not highly correlated to stocks and bonds. Fortunately, you don’t have to have millions of dollars to invest in these strategies, which is often the case with Wall Street firms that offer these types of Alternative Investments.

Some of our Alternative strategies are restricted to “accredited investors” only (minimum net worth $1 million, excluding primary residence or $200,000 annual income), but most are available to non-accredited investors as well.

With the number of Alternative Investments growing so rapidly, many investors have a hard time deciding where to invest. We help you with that. New clients complete our Confidential Investor Profile where you give us some basic information about your investment experience, your goals and your risk tolerance.

From there, you visit with one of my experienced Investment Advisors who will help you determine which of our Alternatives may be best for you. We typically recommend investing in 2-3 programs to achieve good diversification among the various strategies.

On all investments, you will receive monthly or quarterly account statements showing the exact balance for each reporting period. You always know where you stand.

Types of Alternative Investments Available to Individual Investors

Most investors are at least somewhat familiar with the Alternative Investments listed in the first grouping above. Hedge Funds come in a wide variety of offerings and may include any of the assets listed in that category, including natural resources and energy, private equity, real estate, art/antiques, infrastructure and others just to name a few.

It is the Alternative Investment strategies in the second grouping of styles which are less familiar to retail investors, although demand for these unusual strategies is growing rapidly.

All of the Alternative Investment strategies we offer are ranked in terms of how much risk they take. Risk categories range from “Core” holdings  to “Value Add” holdings to “Opportunistic” holdings, with risk levels increasing as we go up the scale.

Our Investment Advisors can explain each of the strategies to you and help determine which are most suited to your goals and risk tolerance. Again, we recommend you consider at least 2-3 strategies for adequate diversification.

Special Report: “Investing Like An Institution” – Now You Can

Large institutions including huge pension plans, large endowments and other sophisticated institutions have dramatically changed the way they invest over the last 25-30 years. Instead of investing their assets mostly in traditional stocks and bonds/fixed income, the largest institutions now for the most part invest the bulk of their assets in nontraditional Alternative Investments.

Many now have 50% or more of their investable assets in Alternatives they wouldn’t have dreamed of investing in just a couple of decades ago. In our Special Report, Investing Like an Institution, we show you how four of the largest institutional investors in the world allocate their assets. We think you may want to emulate these allocations in your portfolio, and we show you just how to do it.

As you’ll see, these “smart money” portfolio managers have the majority of their assets invested in Alternative Investments, with the minority invested in traditional buy-and-hold stocks and bonds. Some of these institutions have only 10%-15% invested in these traditional investments. This represents a “radical shift” in their asset allocation.

In the past, it was impossible for retail investors to find Alternative Investment strategies they could afford to get into. Investment minimums were often $1 million or more. But in recent years, this has changed dramatically. There are now Alternatives you can invest in for as little as $50,000. At Halbert Wealth Management, we have over a dozen Alternatives which fall into this category. If you have $250,000 to invest, we can build for you a portfolio similar to what the “smart money” managers use.

The bottom line is: If you want to invest like an institution, nothing is stopping you. The best thing to do in my opinion is to get with one of our skilled Investment Advisors at Halbert Wealth Management and let him show you the actual performance record of these strategies and how they could fit into your portfolio.

Then you can decide if you want to restructure your portfolio to look and perform like an institutional investor. The restructuring effort is free of charge; we don’t charge for the analysis. There will be management fees once you get into the various investments, of course, but it costs you nothing for us to take a look, and there is never any pressure to invest.

Be sure to download our Special Report: Investing Like An Institution right away. In it, we make the case for Alternative Investments and show you the past performance of four of the largest institutions in the world.

You can also read why some of these mega-managers have made such significant changes to their portfolios, and how they’ve dramatically shifted their emphasis from traditional stocks and bonds to Alternative Investments.

And finally, keep in mind we’ll be right there with you every step of the way should you decide to make some of these changes. So, call us at 800-348-3601 and get the ball rolling. It won’t take a lot of your time to get the analysis started. I think you’ll be glad you did.

Finally, as always keep in mind I have a large chunk of my own money invested in the Alternatives we recommend. In fact, I have over half of my net worth invested right alongside of you. I never ask clients to invest in anything I wouldn’t put my own money in. So just know I am experiencing the same results you are. Thank you for your business!

Very best regards,

Gary D. Halbert

SPECIAL ARTICLES

What Are Alternative Investments?

Forbes: Different Types of Alternative Investments

Gary's Between the Lines column: Dems Want Us To Give Up Election Primaries – Why?

 

Forecasts & Trends E-Letter is published by Halbert Wealth Management, Inc., a Registered Investment Adviser under the Investment Advisers Act of 1940. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of the named author and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific advice. Readers are urged to check with their financial counselors before making any decisions. This does not constitute an offer of sale of any securities. Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have their own money in markets or programs mentioned herein. Past results are not necessarily indicative of future results. All investments have a risk of loss. Be sure to read all offering materials and disclosures before making a decision to invest. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.