Caveat Investitor: An Alternative View on Alternative Investments

Recently, there has been a great deal of attention given to the "democratization" of alternative investments like private equity and credit. Once almost solely the domain of institutions like pensions, endowments and foundations, new investment vehicles now provide retail investors and their financial advisors with access to these once-exotic asset classes. The alternative investment industry is seeking to attract retirement savers as well, with these investments likely to find their way into 401(k)s in the not-too-distant future.

Despite all of this, we believe an important question must be raised: even if retail investors can access alternative investments more easily than ever before, does it necessarily mean they SHOULD?  To be clear, Drum Hill has always firmly believed that these types of products are not suitable for the vast majority of our clients, especially when considering liquidity needs and investment time horizon.  To provide you with a better understanding of why we feel that way, this presentation considers of the supposed benefits and frequently glossed-over disadvantages of alternative investments. Though we live in a world where access to alternatives is certainly more seamless and will likely become ever more so, we have noticed that there remain a great number of misconceptions about the space, especially as it pertains to retail investors. It is our hope that readers can come away with some important facts and considerations, and draw their own conclusions.

View the Presentation Here