Since the debt crisis of 2008, many investors have sought to build market resiliency into their portfolios through diversification in funds outside of the traditional markets. While achieving total immunity to market risk is unlikely, a strategic, outside-the-box investment approach that incorporates holdings from intensely different market sectors is a great start.

But if it’s such a good idea, why isn’t everyone doing it? And why are there so few portfolio managers offering access to non-traditional investments - otherwise known as alternatives? I believe this is largely because of the historically high barriers to entry. The non-traditional investment space is comprised of everything other than traditional stock selections: raw land, buildings, private businesses, mortgages and other private loans are just a few examples. While there are a great variety of opportunities, these types of investments are very often characterized by liquidity issues, high initial capitalization values, the requirement for knowledge specializations, and long time horizons. Alternatives are not often practical for the average investor.

Capstone portfolio managers excel at providing our clients with intense portfolio diversification, including access to quality, liquidity and non-traditional investments. By incorporating these investments into a fund structure, many of the common barriers of entry are overcome. While we include other risk-mitigating tactics in our portfolios, this is the cornerstone of the strategy we deploy against the risk of a market crisis. And, it has been gratifying to witness the peace of mind that our investors experience once some of the volatility risks in traditional markets are mitigated.

Maria Dawes, Portfolio Manager
Capstone Private Wealth