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Recently, I wrote about alternative credit and the rationale we use for this type of alternative asset category at Strategic Wealth Partners. Another area of alternatives we use extensively is what we term “alternative equity.” In order to discuss this topic, traditional equity investing first requires review.

Why do people invest in equities to begin with?

An equity investor has the opportunity to participate in the growth of a company. A company’s value is reflected in a company’s profits, growth in profits, and distributions from those profits in the form of dividends.

As anyone can attest to lately, it certainly feels like the economy and financial markets are confounding. Browse any news source of your liking and you’re bound to see the first few articles with titles that make your head spin. Disruption brings change, including to capital markets. While this can bring financial anxiety, it also creates opportunity for investors.

A new school year just started for my daughters, Myles and Sawyer. And with this came A LOT of emotions in the Karmin household. There were tears of sadness for…

I will admit that I am a little bit of a news junkie. In the age of the internet, we are constantly bombarded with stories about anything and everything vying for our limited time and attention, from the “Most Exciting Football Play of the Week” to the “Best Places to Retire.” Even more so, money controls many of our basic human emotions, such as personal security, fear, and greed. With the constant deluge of information coming at us from all directions, how are we supposed to stay up to date with what’s going on in the world AND maintain our long-term investment strategy?

As I mentioned in my article last summer, there are many types of alternative investments. Within this discussion, we created two categories, alternative asset classes and alternative strategies. A subset of alternative strategies is alternative (‘alt’) credit. From where we sit, there are great opportunities presently in the alt credit area. In this piece, I’ll discuss why we like this area of the capital markets.
Background on Investing in Traditional Bonds
When building a portfolio of bonds, investors often seek securities where interest payments are fixed, like a traditional bond, and when there is a specific date that the bond matures. A bond makes the same payment every six months, with the principal being paid at maturity. Investors often take comfort with the defined nature of bonds and especially like them when the credit quality is from an institution like the US federal government or large credit-worthy corporations.

SWP Principal and Co-Founder David Copeland was a guest on the CAIS hosted webinar Building with Alternatives. CAIS is a financial technology company that provides access, education, and operational efficiency to independent wealth advisors who utilize alternative investments in client portfolios.

Throughout the webinar, David shared his views on how SWP builds client portfolios with alternative strategies. 

Specifically, David provides insights on alternative asset classes and investment strategies that SWP uses to meet client objectives. Additionally, he discusses the opportunities in alternatives that he is most excited about today, how to build towards a target allocation, practice management with alternatives, and common pushback from clients.

Many high-net worth and ultra-high net worth individuals have accumulated significant pre-tax assets in tax-deferred accounts such as IRAs and 401(k)s.  While these types of accounts offer the benefit of tax-deferred growth, they also come with unique considerations when it comes to wealth management.

There are countless articles that address the basics of IRAs, 401(k)s, and other types of tax-advantaged accounts – this article is geared specifically towards those individuals who have already amassed high six-figure or seven-figure balances in pre-tax retirement accounts. For that reason, I will skip over the basics, except to mention that since pre-tax IRAs and 401(k)s are funded with (you guessed it) pre-tax dollars, distributions are taxed as ordinary income. This is important to remember throughout the article.

SWP Principal Mike Karmin doesn’t know whether or not the economy is heading for a recession in 2023. He does, though, feel strongly that investors should maintain their allocation to the stock market regardless of whether they believe that the Federal Reserve can successfully execute a soft landing.

In this short video, Mike shares some historical data that supports long-term investment in equities, even if a recession does come to fruition.

As you are likely aware, ongoing volatility and rising interest rates made 2022 a very challenging year in the capital markets. We believe that this past year has highlighted the need for advisors to explore investment opportunities that exist beyond the traditional stock and bond markets.

The private markets are one such opportunity set. In this article, we discuss what the private markets are, how these investments may fit into a diversified portfolio, and how we use them.