These Alternative Investments Can Help Your Portfolio Shine

Stocks and bonds received a brief boost following Wednesday’s FOMC meeting as Chairman Powell struck a relatively dovish tone. However, the markets quickly reversed as Janet Yellen, who was speaking in front of congress at the same time Powell spoke, made clear there’s no plan for a blanket backstop/bailout for depositors.

On Thursday, both equities and interest instruments tried to resume the rally, but started falling by midday as investors reassessed the ramifications of what is likely to be an economic contraction, as bank lending and overall financial conditions begin to tighten.

The flight from cash accounts, whether savings checking or anything not explicitly covered by the FDIC $250k limit, will keep flowing out of the banks, even the top tier banks like JP Morgan Chase (JPM) or Bank of America (BAC).

So where is the money going and where can investors look for alternatives? Let’s come up with some ideas.

Gold has been the traditional ‘store of value’ for more than 5,000 years. It’s also been enjoying a nice rally as of late, gaining nearly 12% since the implosion of Silicon Valley Bank (SVIB) on March 9.

A great low cost vehicle for exposure to the yellow metal comes via SPDR Gold Trust (GLD).

Two main attractions for GLD are the low cost of a 0.40% fee and the fact it owns physical gold; in this way it tracks the underlying asset very closely, as opposed to other gold ETFs, as some use futures contracts that are subject to term structure that require them to roll positions.

Next up, ProShares Bitcoin Strategy ETF (BITO), which tracks… you guessed it, Bitcoin. Bitcoin has often been referred to as “digital” gold with the optionality that it could also become a “currency” for the internet age.

I don’t have an opinion on what bucket of asset class BTC and other cryptocurrencies might fall into, however, it has a core cohort of believers and they seem to have faith, no matter what regulations and their impact may be lying in wait for the industry.

What I do see is Bitcoin is up some 57% for the year-to date and BITO is keeping track right along with it.

The fund’s fees are 0.95%, which seem reasonable for such a volatile and new asset class.

Additionally, there’s a host of other funds, such as Blackstone Alternative Multi-Strategy Fund Class I (BXMIX), which seeks to achieve its objective by allocating its assets among a variety of non-traditional or “alternative” investment strategies. These “alternative” strategies allow investors to gain exposure they would otherwise get with most equities on the market.

Alternative can mean many different things when it comes to investing. Alternative sectors, strategies, or assets. All of which are ways investors can unlock more value from the market, and ultimately, their portfolios.

How to Unlock More Opportunity with Magnifi Personal

Start by taking a look at a variety of Alternative investments to see which one you should add to your portfolio. Assess risks vs. reward of each particular strategy or vehicle and feel yourself becoming a more savvy investor with each use of Magnifi Personal.

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