Guess What? Financial Institutions Are Embracing Alternative Investments More than Ever
At Belrose, we’ve seen firsthand the power of pursuing alternative investments, like commercial real estate. Unlike traditional investment vehicles, like stocks and bonds, commercial real estate (more specifically, self-storage investing) has the power to help investors achieve their three primary investment goals: security, income, and growth.
Yet, alternative investments have for years remained just that… alternative (in other words, not mainstream). So anytime we see a major industry powerhouse or publication praising alternative investments, we feel validated in our own findings and excited that more investors are learning about them.
Let’s take a look at a few recent examples of how alternative investments are becoming more mainstream than ever.
UBS: “What can alternatives do for your portfolio?
Prominent global wealth manager UBS recently published an article titled “What can alternatives do for your portfolio?” In this piece, they confirmed that alts are effective in diversifying your portfolio and mitigating some losses caused by poor stock or bond performance.
In fact, they concluded that “Adding 20% alternatives to a balanced portfolio has the potential to increase expected annual returns by about 50bps per annum over the long term, based on our capital market assumptions.”
Aside from the benefits of diversification and better risk-adjusted returns, we were happy to see UBS mention some of those same advantages of self-storage we mentioned above (security, income, and growth).
Here’s what they had to say about it: “Private market investments may help generate income and grow long-term wealth amid uncertainty.”
We agree with the findings of this article, and we’re thrilled to see more reputable and esteemed institutions bring alts to the forefront of the financial services industry.
Wall Street Journal: “Wall Street Concedes There Is Finally an Alternative to Stocks”
In this piece titled “Wall Street Concedes There Is Finally an Alternative to Stocks,” the Wall Street Journal shares a few thoughts regarding Wall Street’s sentiment on alts. Following the 2008 financial crisis, there’s been a (rather untrue) acronym floating around Wall Street called TINA, standing for “there is no alternative.” This probably won’t come as a surprise, but here at Belrose, we certainly disagree with this.
Well, it turns out that Wall Street has since changed its tune and may now feel the same way we do about commercial real estate and other alternative investments.
Fast forward to 2022 with its historically high inflation and ongoing market volatility. When stocks and bonds slumped, alternative investments soared. Suddenly, big Wall Street players like Goldman Sachs and Deutsche Bank were introducing new phrases like TARA and TIARA — “There are reasonable alternatives” and “there is a realistic alternative,” respectively.
While there seems to be some clever wordplay happening on Wall Street, the message they’re portraying is still encouraging: alternative investments exist, and there is room for them in an investor’s portfolio.
Yahoo Finance: “Survey Finds Increasing Demand In Alternative Investments For Investors”
This Yahoo Finance article, “Survey Finds Increasing Demand In Alternative Investments For Investors,” shares the findings from a recent “Trends in Investing” survey conducted by the Financial Planning Association (FPA).
According to the survey, a greater number of financial advisors are helping their clients hedge against potential stock market volatility or recession by diversifying portfolios with alternative assets. Around 28% of survey respondents indicated that they are actively investing in alts for their clients’ portfolios.
The survey also asked advisors why they’re focusing more on alternative investments in recent years. The answers included:
Risk mitigation (41%)
Upside growth potential (25%)
Protection against inflation (24%)
Income generation(23%)
Again, it’s important to note here that these objectives directly reflect the investment goals that self-storage can help investors achieve (security, income, and growth).
Want to Learn More About Self-Storage Investing?
We love helping our community of investors benefit from the advantages of self-storage investing, and we’re thrilled that Wall Street and the financial services space is beginning to recognize its potential as well. If you’d like to be the first to know about our next investment opportunity, join our Inner Circle now.
