Kate Boucher, US Head of Wealth Management Alternatives at Goldman Sachs Asset Management, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss how alternative investments increase the diversification of investment portfolios.
Boucher states that advisors are drawn to the increased opportunity set offered by alternative investments. There are now five times as many alternative investment asset management companies as there were 25 years ago, while the number of publicly traded companies has substantially declined.
Individual investors are particularly interested in alternative investment categories that offer yield, including private credit and real estate credit. Once investors become comfortable with private credit investments, they often expand portfolio allocations into infrastructure and private equity.
Goldman Sachs Asset Management runs $500 billion in alternative strategies for clients across private equity, private credit, real estate, infrastructure, and hedge funds. Boucher notes that advisors and their clients should understand the liquidity of alternative investments and size the allocation appropriate to their personal liquidity needs.
Technology has driven innovation on both the front and back ends of the alternative investment market. An electronic subscription portal facilitates transactions. Back-end technology provides enhanced performance reporting, combining alternative investments with other portfolio assets.
Goldman Sachs is committed to educating advisors and investors. Starting with the basics, the more comfortable investors become with the strategies, the more likely they are to increase allocations. Education includes defining each asset class, showing the role alternatives play in portfolios, as well as the benefits and risks.
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