Is Alt Even Alt Anymore?

Last month in The Juice, we detailed a BofA study that showed striking differences between how “old” people (individuals from 44 on) and “young” people (the sub-44 crowd) view investing. 

You can find the link to that story in today’s Freshly Squeezed section. 

The main finding was that younger, wealthy investors are much more open to and invested in alternative investments than older, also wealthy investors. 

For the younger people, cryptocurrency and private equity topped the areas where they see the biggest growth opportunity. For the older folks, crypto ranked near last and private equity showed up in the middle of the pack. 

Even more striking, older investors put domestic equities at the top of their list, whereas younger investors put them near the bottom. Of course, just as you might be missing out if you refuse to buy alternatives, it has been proven that opting out of domestic stocks hasn’t been a great idea either. 

But that’s not the point. What matters more is the attitude, particularly if you have an eye on the future and how to structure your portfolio going forward. 

• 72% of people between the ages of 21 and 43 say they are skeptical of traditional investments, meaning they believe “It is no longer possible to achieve above average investment returns by investing solely in traditional stocks and bonds.”
• Only 28% of the 44-plus crowd hold the same belief. 

Super telling. 

In other words, a majority of younger investors (and these aren’t slobs; they’re people with significant wealth) think the days of a bull stock market might soon be behind us. 

Taken together, this begs the question The Juice asks today: Are alts even alt anymore?

Now, recall, we like alts as part of the following, three-pronged investing approach:

• Your long-term nest egg, situated in low-cost index ETFs
• Aggressive (but smart) speculation
• Alternative investments to diversify (like it’s not 1999, but freaking 2025!)

And it appears we’re not alone.

A recent survey of financial advisors revealed that recommendations to invest in alts increased from 25% in 2020 to 55% this year. Just 24% of advisors said they have not recommended an alt. 

Of those who do, the number one reason for doing so is diversification, closing followed by growth. 

In a separate report, Morgan Stanley pointed out that alternative investments such as private credit, private equity and real estate represent strategies that “are no longer the exclusive domain of institutions and wealthy individuals” and that “with the democratization of alternatives — the introduction and evolution of client-friendly vehicles — many individual investors now have access to these strategies.” 

We have spent a good part of November discussing these “client-friendly vehicles” with a focus on platforms that allow individual investors to access venture capital and get a piece of large-scale real estate developments. 

Morgan Stanley went on to point out that access to alts, including direct access for DIY investors and through financial advisor recommendations will shake up the traditional 60/40 portfolio, which is a 60% allocation to equities and a 40% allocation to fixed income. The firm expects “advisor allocations to alternative investments are… to steadily increase from 4% reported in 2022 to an anticipated 4.5% in 2024.”

Twenty years ago, alts accounted for roughly 6%, or $4.8 trillion, of worldwide assets under management. And most of that money sat with hedge funds. Today, we’re at $22 trillion, or 15%, and, while the playing field still tilts heavily toward the big money, it’s a bit more level, thanks to many of the broad and specific matters The Juice has been discussing for the last few months. 

At the very least, The Juice thinks you should dip your toes into the alternative investment universe. If you don’t want to do it the non-traditional way via, say, a StartEngine investment or some other venture capital, real estate or collectible opportunity, ETFs, which look and feel more familiar, might be a solid place to start. 

Next week in The Juice, we’ll discuss what we consider alternative ETFs within the enormous ETF space. They, too, can help you diversify your portfolio as we quickly approach the new year. 

The Bottom Line: The numbers don’t lie. While alts certainly aren’t as mainstream — or traditional — as stocks or straightforward ETFs yet, it’s also difficult to classify them as something obscure. Instead, we prefer to look at them as alternatives to conventional allocation and diversification conceptions. 

We also look at it a different way. 

Speculation for many long-term investors used to mean throwing beer money (like a 1% to 5% of your portfolio) at long shots such as penny stocks (ugh!), long-dated options or, more recently, some social media-driven meme stock or coin. Now, you can “speculate” in a way that doesn’t fit the traditional, gambling-connotated definition of speculation. You can do it in emerging areas that stand a much greater chance of generating long-term returns.

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