Alternative investments make up a $13.8 trillion industry.
What exposure to these assets should an investor have?
In this collaboration for Finect, Conrado La Roche Riesgo, head of fund analysis and selection at DPM Finanzas EAF, explains: “From our point of view, there is no optimal percentage when it comes to assigning weight to alternative assets. As with other assets, valuations should be the ones that determine the relative attractiveness of this asset compared to another. The liquidity premium is key; We should not assume that any strategy in alternative assets will generate better returns than liquid assets.”
However, an upper limit can be set. According to Conrado, “It is reasonable that these assets do not weigh more than 20% of the portfolios for liquidity reasons, but the volume of assets and the needs of each investor play a fundamental role in determining the final weight in each portfolio”.
Alternative assets allow for greater diversification and additional returns.
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