We’ve been saying for a while that in the foreseeable future it will become harder to realize good returns on traditional investments (stocks and bonds) due to an overvalued stock market and rising interest rates that negatively affect the bond market.
It looks like others in the industry are finally catching up to our thinking, as illustrated by a recent Reuters article that featured comments from prominent investment fund managers.
Top investment fund managers at the Milken Institute Global Conference this week said they had little choice but to focus on unusual and complicated corners of the financial markets as stock markets have risen and interest rates remain low.
“If you look out there and you have a few shekels you’d like to put to work, it’s hard to figure out how to do that on an attractive risk-return basis,” said David Hunt, president and chief executive officer of Prudential Financial’s $1 trillion investment management unit PGIM.
Hedge fund and private equity fund managers gathered at the Beverly Hilton hotel for the annual event detailed a wide variety of ways they are hunting for better returns than what more generic investments, like U.S. government bonds, can offer.
Hunting for opportunities with an attractive risk-return ration takes a lot of experience and creativity in today’s marketplace. Investors seeking higher returns need an advisor that can think outside the box of traditional investments.
But, overall, managers described the process of finding lucrative investments as a struggle.
“We are grinding it out every day, either squeezing basis points of extra yield in our public portfolios or making an extra call to source a private transaction,” said Mark Attanasio, managing partner of $24 billion credit investment firm Crescent Capital Group LP.
Several big investors urged caution, arguing that stocks appear fully priced and bond markets may be poised for a correction.
We agree, it’s hard to make money right now. And they’re spot on about the status of the stock and bond market (something we’ve been saying for months already).
So what’s the answer? Alternative investments.
Alternative investments such as real estate, high-yield bonds, private equity and hedge funds, provide the opportunity to both diversify and protect investors’ portfolios while also bringing the possibility of higher returns depending on the investment.
However, getting into these investments can’t be achieved through a robo-advisor. You need a real-life human advisor with established relationships and a phone full of contacts to help you access attractive alternative investment opportunities.
That’s where we come in. If you need help generating a higher return on your portfolio or just have questions about alternative investments and how they work, then we are happy to assist.
Alternative asset classes have been our specialty since day one, and 40-plus years later, we are still one of the few wealth management firms around who actively seek these opportunities for our clients to help improve their portfolios.
Click here and let us know if we can help you any questions today.