Broker Check

ALTERNATIVE INVESTMENTS

Our Approach to Alternative Investments

Click the link below to download the Stevanovic Metz Group's brochure on alternative investments.

The brochure is designed to provide a general understanding of alternative investments and how they could benefit an overall asset allocation.

DOWNLOAD THE ALTERNATIVE INVESTMENTS DIGITAL BROCHURE

What Are Alternative Investments?

Alternative investments provide access to traditional markets (i.e. stocks and bonds) through non-conventional vehicles or access to non-traditional markets.

Many of these strategies exhibit a low correlation to the stock market and / or bond markets meaning returns may be independent from other parts of a portfolio. This type of performance can enhance diversification, and therefore reduce overall portfolio risk. Yet, with that often comes less liquidity and greater product complexity.1

A simple way to understand alternative investments is to contrast them with traditional investments.

A traditional investment generally consists of investments that are made into companies that have chosen to list them on public markets. On the other hand, alternative investments span across both public and private markets.  

Alternative investments also differ from traditional investments concerning: (1) long & short strategies, (2) leverage, and (3) liquidity.

Baird provides a comprehensive due diligence process on alternative investments for the firm. Our team is dedicated to going beyond Baird's research and conducts our own due diligence that focuses on liquidity, fees, and risk versus reward.

Our thorough process of investigating and verifying financial information helps us assess the potential risk and benefits to our clients. The result is an informed decision as to whether or not a particular alternative investment is appropriate considering the client's individual financial goals.

Characteristics of Alternative Investments

Long & Short Strategies

Alternative investments are able to go 'long' and also 'short' - meaning they can potentially profit when a stock or bond's price falls.

Leverage

Alternative investments more readily utilize leverage in form of borrowed cash from external parties or leveraged instruments such as derivates.

Liquidity

Alternative investments are generally less liquid than traditional investments.

Alternative Investment Asset Classes

Private Debt

Private Debt

Private debt represents a customized loan to a private company. It's typically considered an alternative investment because of its association with privately owned companies and illiquidity.4  

Hedge Funds

Hedge Funds

A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction and risk management techniques in an attempt to improve performance, such as short selling, leverage, and derivatives.3

Private Equity

Private Equity

"Private Equity" often referes to investing in private companies that are not traded on an exchange. It covers different types such as buyouts, venture capital, growth equity, secondaries, and distressed.2

Private Real Estate

Private Real Estate

Private real estate is generally defined as real property consisting of land, buildings and other improvements. It is a popular asset class used by institutional investors such as pensions, endowments and family offices, as well as individual investors looking to access alternative sources of income and growth, as well as to diversify traditional portfolio exposures.

Precious Metals

Precious Metals

Precious metals can be used as a way to diversify your overall portfolio as well as provide capital appreciation, liquidity and hedge against currency devaluation.

Types of Investors

Accredited Investor

To qualify as an Accredited Investor, the SEC requires interested investors to meet at least one of the following qualifications:

  1. Net Worth $1M - Individuals with a net worth of $1,000,000, excluding the value of their primary residence
  2. Annual Income - $200K / $300K - Individuals with an annual income of $200,000, or joint income of $300,000 with a spouse
  3. $5M - Entities with a net worth of $5,000,000


Qualified Client

To meet the requirements of a Qualified Client, the SEC requires interested investors to meet at least one of the following qualifications:

  1. Net Worth $2.2M - Individuals with a net worth of $2,200,000 million, excluding the value of their primary residence
  2. $1.1M AUM - Entities with at least $1,100,000 million invested under management of the fund

Qualified Purchaser

To meet the requirements of a Qualified Purchaser, the SEC requires interested investors to meet at least one of the following qualifications:

  1. Net Worth $5M - Individuals with at least $5,000,000 in investable assets
  2. $25M Net Worth - Entities with at least $25,000,000 million in investable assets
  1. Baird, "Alternative Investments: An Overview"
  2. Foundations of Alternative Investments: Private Equity | (C) 2021 Mercer LLC., via CAIS IQ
  3. Reisenbichler, Nic, Manager, Investment Products, Hedge Fund: What is a Hedge Fund? Baird 2020 PWM Investment Consulting 
  4. Baird Wealth Solutions Group: Private Debt: An alternative asset class that has risen in prominence

Alternative Investments are complicated. We're here to answer your questions.

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