Alternative Investments Explained

Most investors are familiar with the two main pillars of investing: equities and fixed income. These traditional markets have long formed the core of diversified portfolios. However, at Optimize, we recognize that the world of investing offers more—and that adding carefully selected alternative investments can further strengthen your portfolio by reducing its reliance on traditional markets.

Alternative investments include assets like private credit, infrastructure, real estate, and other private market strategies. These investments are commonly used by pension funds and endowments to add diversification, generate stable income, and provide resilience during public market volatility.

Why Traditional Markets Alone May Not Be Enough

Traditional stocks and bonds remain essential components of your portfolio, but they are also increasingly influenced by the same economic forces, such as interest rates, inflation, and global growth trends. In times of market stress, stocks and bonds can sometimes move in tandem, reducing the diversification benefits investors once relied upon.

That is why including alternative investments—assets that behave differently from traditional public markets—can help further smooth your portfolio’s returns, manage downside risk, and create new sources of return that are less correlated to stock or bond markets.

How Alternative Investments Diversify Your Portfolio

At Optimize, we use alternative investments to:

• Provide stable, income-generating assets.
  Many alternatives, such as private credit and infrastructure, offer reliable income streams that are less sensitive to public market cycles.

• Reduce reliance on equity market performance.
  Alternatives often move independently of stock markets, helping to cushion your portfolio during equity downturns.

• Enhance portfolio resilience during periods of volatility.
  These investments can provide a steady anchor when traditional markets are turbulent, supporting both financial and emotional discipline.

• Add inflation protection.
  Certain alternative assets, such as real assets and infrastructure, have historically provided a hedge against inflation by generating income linked to economic activity or price movements.

The Role of Pension-Style Assets in Your Portfolio

Optimize incorporates pension-style assets—long-term, stable investments used by institutional investors—into your portfolio where appropriate. These include private credit, infrastructure, and other alternatives designed to provide consistent returns over time, without the daily swings of public markets.

These assets are particularly valuable in creating a stable core for your portfolio, reducing reliance on stock market performance, and providing steady income to support your cash flow needs or reinvestment goals.

Managing Liquidity and Risk in Alternatives

Alternative investments often come with lower liquidity compared to stocks or bonds. At Optimize, we carefully manage this by ensuring your overall portfolio maintains the appropriate liquidity to support your lifestyle, cash flow needs, and financial flexibility.

We incorporate alternatives thoughtfully and at levels that complement your broader portfolio, always ensuring they align with your goals, time horizon, and comfort with liquidity.

Alternative Investments: A Complement, Not a Replacement

At Optimize, alternatives are not meant to replace stocks and bonds—but to enhance the diversification, resilience, and income potential of your portfolio. They add another layer of risk management and balance, helping you pursue your goals with greater stability and confidence—especially during periods when traditional markets face challenges.

By combining traditional and alternative investments within a disciplined, globally diversified strategy, we help you build a portfolio that is designed to work through all market cycles, not just when the markets are calm.