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106 Things We Do For Clients, No. 43

No. 43 of 106 Things We Do For Clients

Provide you with alternative investment options.

When Americans think of investments the focus is usually on stocks, which represent owning a slice of American companies. This is not surprising, since the focus of the financial press is US corporations. The most popular slice to own is the S&P 500, which represents the 500 largest US corporations. It’s not uncommon for US stocks to comprise 60% of a “moderately conservative” portfolio. If you are truly a moderately conservative investor, you will want to hold many other assets classes to protect yourself from the steep gyrations given to a single asset class like large US stocks. These alternatives include:

• Large, mid, small, and micro-cap US and international stocks.
• Global fixed income holdings of high quality, high yield, and Treasury Inflation Protected Securities (TIPS).
• A global mix of Real Estate Investment Trusts (REITS), commodity index funds, managed futures, and long/short funds.

A strategic mix of these investments may mean the portfolio will hold less than 10% of large US stocks without giving up much upside gain and significantly minimizing volatility.

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