Alto is a self-directed IRA administrator with a mission of providing alternatives for all. Where alternative assets were once reserved for the ultra-rich, now retail and accredited investors can diversify their portfolios by investing in quality alternative investments like private equity, venture capital, real estate, farmland, and crypto using retirement funds. Pulse 2.0 discussed alternative investments with Alto CEO and co-founder Eric Satz to learn more.
Alternative Investments
What are alternative investments and how does Alto help investors facilitate these investments? Satz said:
“Alternative assets generally refer to investments in non-registered, non-publicly-traded securities, such as real estate, private equity and venture capital. Because alternatives’ returns are uncorrelated to those of the public markets, they offer investors a way to reduce overall portfolio volatility while increasing returns per unit of risk.”
“Historically, you had to be ultra-wealthy or an institutional investor to invest in alternative assets, making true portfolio diversification difficult for everyday Americans. However, technological improvements, together with a few regulatory changes, over the past decade have opened up numerous exciting opportunities for retail investors, eliminating some of the previous barriers. At Alto, we enable individuals to invest in alternative assets such as farmland, private equity, real estate, venture capital, and art, using their tax-advantaged retirement funds.”
Benefits Of Investing In Alternative Assets
What are some of the benefits of investing in alternative assets? Satz shared:
“The most important benefit of alternatives in portfolio construction is straightforward: diversification. Diversification reduces volatility and increases returns. The returns that used to be available to investors when a company went public are no longer available and the only way to participate in that kind of alpha — or potential upside — is to invest in those same companies when they are private.”
Alternative Assets For 2024
Are there any alternative assets (i.e. real estate, private equity, crypto, etc.) that you will be keeping a close eye on in 2024? If so, why? Satz pointed out:
“Notwithstanding the recently revised interest rate guidance for 2024, I think we’ll see a number of interesting opportunities in what is already a distressed commercial real estate environment. Private company valuations have also corrected over the past 24 months, so I think it will be a super time for private equity and venture capital funds to be deploying capital.”
Trends
What major trends do you anticipate will shape the investing space in 2024? Did any of these trends exist in 2023? Satz noted:
”As mentioned, in 2024, I still anticipate distressed real estate conditions. Among financial institutions, there will be competition for deposits as people withdraw cash to cover higher living expenses. New retail credit models will emerge to fill the void created by a tighter traditional lending environment. Platform consolidation within industry verticals will persist, aiming for customer and revenue scale and cost savings. Traditional broker-dealers and crypto exchanges will see blurred lines. Additionally, RIA’s will redefine portfolio construction, expanding diversification to include both public and private equity and public and private credit.”
Additional Insights
Are there any other insights you’d like to share that we didn’t cover? Satz concluded:
”In 2024 and 2025, private funds will attract a greater amount of capital from everyday retail investors than has been raised from this population in the preceding decade.”
