We’ve been talking a lot with advisors about alternative investments — real estate, private equity, private credit, and gold. That’s no surprise.
Today’s elevated equity and bond correlations have created the need to look beyond a traditional 60/40 portfolio for diversification. And at the same time, economic and market uncertainty have increased the importance of tailoring portfolios for specific objectives including income, downside protection, macro resiliency, etc.
But how much should you allocate to alternative investments relative to traditional core assets?
From a top-down point of view, the 2024 Global Market Portfolio (GMP) provides a helpful guide. Encompassing the full universe of investable assets and representing the investible opportunity set available to all investors globally, the GMP may be useful as a natural benchmark for your strategic asset allocations.
In the most recent update, the GMP’s allocation to alternatives is 13.4%, up from just 6.00% in Q4 2000. Notably, the 15% decrease in equities between 2000 and 2024 is split roughly equally between bonds and alternatives.
Asset Class | Q4 2000 | Q2 2024 |
---|---|---|
Equity (%) | 59.77 | 44.82 |
Bond (%) | 34.24 | 41.82 |
Alternative (%) | 6.00 | 13.35 |
Given the range of strategies available, it’s important to tailor the alternatives portion of your portfolio to meet your clients’ specific investment objectives.
The State Street SPDR® ETF Strategy team offers additional educational resources to help you and your clients understand alternatives and how to invest in them.
If you have questions or want to learn more about investing in alternatives, please contact us. And let us know if there’s a question From the Field that you’d like us to tackle in a future article.
The State Street SPDR® ETF Strategy team has the privilege of meeting regularly with financial advisors across the industry. These conversations provide a unique window into the challenges you face — and enhance our dedication to supporting you with the products and insights you need to better serve clients and grow your practice.