Investors have the flexibility to include alternative asset classes in various investment strategies, styles, and risk profiles. This allows them to create a portfolio that meets their specific investment requirements, whether they are seeking additional sources of returns or aiming to diversify from conventional listed equities and bonds. 

Alternative investments offer the opportunity to protect against the unpredictable nature of stocks, mitigate the impact of inflation, and attain higher returns. For example, hedge funds offer a valuable opportunity to achieve diversification beyond equities. Private equity investments strive to achieve a higher rate of return compared to publicly traded stocks. Real assets, such as infrastructure and real estate, aim to offer comparable advantages while also providing a degree of safety against inflation. 

Jade Miller, President, Capital Markets at Bourne Financial Group and Board of Directors President at ADISA, elaborated on the robust investor interest in the alternative assets space, along with the importance of investor education, her decision to get into alternative investing, and how the current market environment compares with other periods of dislocation, among other topics.  

CM: The data clearly show that the appetite for alternative investments is rising. What do you identify as the main drivers of this increase?   

Miller: I believe the increasing appetite for alternative investments is primarily driven by two key factors: market insecurity and the continued robust performance of alternatives despite a volatile economic landscape. With traditional markets experiencing heightened volatility, investors are seeking diversification and non-correlated assets. Alternative investments, such as real estate, private equity, and infrastructure, have demonstrated resilience and historically consistent returns, making them attractive options for investors seeking to mitigate risk and enhance portfolio performance during uncertain times.  

CM: We often hear that investor education is a top priority when investing in alternative assets. Do you agree, and how does that impact your work?     

Miller: Absolutely. Investor education is paramount when considering alternative assets. At ADISA, we recognize that these investments, while offering several potential benefits, are often more complex and less widely understood than traditional assets. Therefore, our primary role is to demystify alternative investments and help equip those in financial services with the tools and knowledge to educate their investors, so they can make informed decisions and navigate this expanding investment landscape confidently and responsibly, ultimately fostering a more informed and robust investment ecosystem.  

CM: Where should investors start when considering alternative assets?   

Miller: First, I would invite all investors and advisors to take advantage of the opportunity to educate themselves on the wide variety of investment vehicles beyond the world of public markets that could benefit them or their clients. From there, investors should reach out to a qualified and knowledgeable financial professional who can help to assess their individual financial goals, risk tolerance, and investment horizon. It’s crucial that the selected alternative assets align with the investor’s specific needs and objectives, as this can help to mitigate potential risks and maximize potential returns.  

CM: What emerging trends do you anticipate the industry will see more of in the short-term and long-term?     

Miller: In the short term, I anticipate the continued emergence of credit funds as a dominant trend. With interest rates at their current elevated levels and lending constrained, these funds may offer compelling opportunities for attractive yields and risk-adjusted returns. While no one knows what the future might bring, I predict a sustained demand for tax-advantaged solutions. Additionally, real estate, particularly data-related properties, will likely maintain its prominence in the alternative investment landscape due to the ongoing digital transformation and increasing reliance on data centers and cloud infrastructure.  

CM: What made you decide to get into alternative investing?   

Miller: My decision to specialize in alternative investments stemmed from a recognition of the distinct advantages they can offer to investors and a desire to make investors more knowledgeable of these potential advantages. For example, many alternative investments, particularly those involving hard assets, are often demand-driven, offering a degree of insulation from broader market fluctuations. The lack of correlation between alternative assets and traditional markets provides a powerful tool for diversification, potentially mitigating portfolio volatility. It was the potential for differentiation and the ability to tailor investment strategies to specific investor needs that really drew me to this sector. 

CM: What are the most common questions your clients are asking now and what are you telling them?   

Miller: The prevailing concerns that we often hear revolve around market volatility and the ongoing instability within the capital markets. Investors seem particularly keen to understand the potential impact of the upcoming election on both their portfolios and the broader economic landscape. In response, we might emphasize that, while volatility may persist and elevated interest rates may be the “new normal,” there are still opportunities to be found. Investors may want to look to investments that prioritize capital preservation and income generation, such as real estate, infrastructure, and select private credit strategies to help navigate the current uncertain environment effectively.  

CM: How does this market compare with other periods of dislocation over the past few decades?     

Miller: When looking at the current market compared to other turbulent markets, I believe there are notable differences between today’s environment and events like the Great Financial Crisis. For example, despite the present market crunch, consumer spending and employment remain relatively robust. Unlike the widespread economic distress that characterized the GFC, we haven’t witnessed a comparable pullback in consumer activity or a significant surge in unemployment. While concerns of a looming recession persist, the resilience of the consumer and the ability of large corporations to manage debt maturities suggest the current market may not culminate in the widespread job losses that often accompany severe economic downturns.  

CM: What are some alternative strategies worth considering? 

Miller: Ultimately, it will depend on an investor’s circumstances and objectives, but, given the current market dynamics, strategies focused on outsized returns and capital preservation may be particularly worth considering. Given the escalating demand for digital infrastructure and the demographic shift towards an aging population, data centers and senior living facilities may present compelling investment prospects. Additionally, credit funds that provide financing to these sectors, as well as private equity opportunities in high-growth industries, may also be worthy of exploration. 

CM: What are the primary challenges facing the alternative assets industry today? And how must the industry address them?  

Miller: The primary challenge facing the alternative asset industry is that of limited investor access. While accessibility has grown recently, we still have a long way to go to broaden participation beyond that of largely high-net-worth individuals. At ADISA, we are consistently working toward the betterment and ease of access for all investors. We believe the industry must address this by finding a balance between regulations that promote investor protection while also enabling wider access to these unique investment opportunities.