As a seasoned investor pursuing the CAIA charter, I once thought alternative assets were out of reach for everyday investors like us. But studying the topic revealed familiar options—real estate, gold, commodities—that anyone can access to build a resilient portfolio.
These assets protect against market volatility and inflation. Here's what you need to know, focusing on straightforward, investable options beyond hedge funds.
Real estate is a staple after stocks—many of us own homes, which count as investments. Short on capital for another property? Enter REITs (Real Estate Investment Trusts).
REITs are publicly traded companies that own and manage income-producing real estate like apartments, malls, hotels, and cell towers. They offer real estate's growth and dividends with stock-like liquidity—sell anytime without months of hassle.
Experts handle the operations, so you don't need property management skills. Learn more in this guide to REIT investing.
Gold has preserved value for millennia, prized for durability, malleability, and industrial uses in electronics and jewelry. Demand surges from booming economies like China and India, which drive 50% of global consumption.
Unlike stocks and bonds, gold moves independently, shielding portfolios in crises.
During the 2020 coronavirus crash, the Dow Jones plunged ~40%, while gold dipped just 12% before rebounding. From September 2019, gold rose 52.15% versus the Dow's 39.88%.
Hold physical gold via storage services (it fits IRAs—details here). Prefer funds? Gold ETFs track prices; precious metals ETFs include palladium, platinum, rhodium. Check listings on the ETF Database.
Commodities—from corn and copper to natural gas—fuel production and consumption worldwide. Diversify via a basket rather than picking winners.
ETFs offer easy access, managed by top firms. They track broad indices using futures, avoiding storage costs while staying liquid. The ETF Database lists them by size.
Year-to-date (as of writing), 24 of 25 top ETFs outperformed the Dow's 18.7%, with returns from 14.62% to 226.75% (bulk shipping). The largest ($6.8B AUM) gained 44.9% via broad futures exposure.
Futures enable active markets for easy trading.
Alternative assets diversify income streams, cut stock-bond risk, and combat inflation—especially gold and commodities, which rise with prices.
Build a balanced portfolio today for long-term protection and growth.
