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Alternative Investments

Diversification isn't a new concept, however, there are more ways to diversify your portfolio than many are aware of. At Beacon Financial Group, we take a holistic approach to financial planning and investing. We explore a wide range of investment vehicles to truly help mitigate risk, increase gains, and spread assets across a broader financial landscape. By having access to some of the nation's top-alternative investment firms, we are able to offer our clients even greater diversification and investment opportunities.

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What Are Alternative Investments?

Alternative investments encompass a broad range of asset classes beyond traditional stocks and bonds. These investments, including real estate, hedge funds, private equity, and cryptocurrency, provide unique opportunities for diversification and risk management. By incorporating alternative investments into your portfolio, you may be able to reduce volatility, enhance returns, and gain exposure to markets that operate independently of the stock market's fluctuations.

Why Consider Alternative Investments?

Traditional investment strategies often rely on a mix of stocks and bonds, but market instability can lead to significant downturns. Alternative investments offer several key advantages:

Diversification: Alternative investments have a lower correlation with traditional assets, meaning they can perform well even when stocks and bonds struggle.
Potential for Enhanced Returns: Many alternative assets, such as private equity and hedge funds, have historically outperformed traditional investments over long-term periods.
Risk Mitigation: Investing in alternative assets can help protect against market volatility and economic downturns.
Access to Exclusive Markets: With firms like Beacon Financial Group, investors can now access high-quality alternative investments that were once only available to institutions and ultra-high-net-worth individuals.

Learn more about the Power of Alternatives

Key Benefits of Alternative Funds

01

Lower Risk Without Sacrificing Returns:

Historical data shows that portfolios with a 25% allocation to alternative funds achieved higher Sharpe ratios and lower volatility than those with only traditional assets.

02

Enhanced Returns:

Private equity and private credit consistently outperformed traditional equities and fixed income over a 15-year period, delivering 11.27% and 8.91% annualized returns, respectively.

03

Compounding Power:

Reduced volatility translates into better long-term compounding. Even with the same average annual return, less volatile portfolios grow more over time.

Hypothetical Case Study

Let's compare the S&P 500 to Beacon's Risk Managed Growth and Income Strategy with alternative funds:

This demonstrates how alternative funds "lower the risk without giving up the returns."

Beacon's Risk Managed Growth & Income Strategy

Standard deviation indicates how much an investment's returns fluctuate from its average return over time. A higher standard deviation suggests greater price swings and more volatility.

Types of Alternative Investments

There are numerous alternative investment options, each offering distinct benefits:

Investing in Real Estate

Real estate investments, including commercial properties, rental units, and real estate investment trusts (REITs), provide stable income through rental payments and potential property appreciation. This asset class is known for its ability to hedge against inflation.

Hedge Fund Investments

Hedge funds employ diverse strategies, such as long-short equity, global macro, and arbitrage, to generate returns regardless of market conditions. These investments aim to balance risk and reward by actively managing portfolio exposure.

Private Equity

Private equity involves investing in privately held companies, often with the goal of improving operations and increasing profitability before selling the company at a higher valuation. This strategy has historically delivered strong returns, making it an attractive option for long-term investors.

Cryptocurrency Investment

Digital assets like Bitcoin and Ethereum offer innovative investment opportunities in the rapidly growing blockchain sector. While cryptocurrency investments can be volatile, they also present the potential for high returns and diversification beyond traditional finance.

Why Choose Alternative Investments Now?

Historically, alternative investment funds were accessible only to high-net-worth individuals through exclusive hedge funds requiring million-dollar minimum investments. At Beacon Financial Group, we've built direct relationships with some of the nation's top alternative investment fund firms, allowing our clients to access these high-quality opportunities without the traditional barriers. With exposure to alternative funds expected to grow by 50% in North America, Beacon clients are uniquely positioned to benefit from these innovative solutions.

Frequently Asked Questions (FAQs)

Q Are alternative investments riskier than traditional stocks and bonds?

Alternative investments can carry unique risks, such as lower liquidity and higher fees. However, they also provide risk mitigation by diversifying your portfolio beyond the stock market.

Q How much should I allocate to alternative investments?

The ideal allocation depends on your financial goals, risk tolerance, and investment horizon. A balanced approach might involve dedicating 10-25% of your portfolio to alternative assets.

Q Are alternative investments suitable for all investors?

While alternative investments offer significant benefits, they may not be suitable for all investors. Consulting with a financial advisor at Beacon Financial Group can help determine if these investments align with your financial strategy.

Ready to Explore Alternative Investments?

Discover how alternative investments can strengthen your financial future. Contact Beacon Financial Group today to learn more about building a resilient, diversified portfolio tailored to your goals.

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Source: Cliffwater, Evestment, Preqin.Timeperiodfrom1/1/2008-12/30/2022, most recent data available. Equities: S&P 500 Index, Fixed Income: Bloomberg U.S. Aggregate Bond Index, Private Real Estate: NCREIF Open- End Diversified Core Equity Fund Index (NFI-ODCE), Hedge Funds: HFN Aggregate Hedge Fund Index, Private Equity: Preqin Capital Quarterly Index, Private Credit: Cliffwater Direct Lending Index. The S&P 500 Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance. TheBloomberg U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. The NCREIF Open End Diversified Core Equity Fund Index is an equal-weighted index of the investment returns from a collection of open-end commingled funds which focus on core real estate investment strategy. The HFN Aggregate Hedge Fund Index is an equal weighted average of all single-manager hedge funds and CTA/managed futures products. The Preqin Private Capital Quarterly Index is an average of private capital portfolios, based on the actual amount of money invested in private capital. The Cliffwater Direct Lending Index is comprised of over 10,000 directly originated middle market loans, providing a benchmark for private debt. Investors cannot invest directly in an index. Indices do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Standard Deviation is a measure of price variability (risk). Past performance is not a guarantee of future results.

Securities offered through Kestra Investment Services, LLC, (Kestra IS), member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS or Beacon Financial Group. Beacon Financial Group is affiliated with Kestra IS and Kestra AS.

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