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March 25, 2025

Key Considerations Before Investing in Alternatives

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Investments generally fall into four major asset classes: stocks, bonds, alternatives, and cash. Alternatives can be opportunistic, such as private versions of stocks and real estate, or diversifying, which have low correlation with the stock market, like private credit.

Over the past 20 years, alternatives have gained popularity, with more investment activity shifting to private markets. According to data from S&P Capital IQ, approximately 87% of U.S. companies with annual revenues exceeding $100 million are privately held. This indicates that only about 13% of such companies are publicly traded, highlighting the significant presence of large private firms in the U.S. economy. As many sizable companies remain private, investors may choose to explore opportunities accessible through alternative investment strategies. If you are considering adding alternatives to your portfolio, we recommend focusing on manager quality and fees. Because of the complexity of these investments, it’s a good idea to consult a wealth advisor about your options.

Sources: S&P Capital IQ. Apollo Academy.

The information provided is educational and general in nature and is not intended to be, nor should it be construed as, specific investment, tax, or legal advice. Individuals should seek advice from their wealth advisor or other advisors before undertaking actions in response to the matters discussed. No client or prospective should assume the above information serves as the receipt of, or substitute for, personalized individual advice.

This reflects the opinions of Focus Partners or its representatives, may contain forward-looking statements, and presents information that may change. Nothing contained in this communication may be relied upon as a guarantee, promise, assurance, or representation as to the future. Past performance does not guarantee future results. Market conditions can vary widely over time, and certain market and economic events having a positive impact on performance may not repeat themselves. Investing involves risk, including, but not limited to, loss of principal. Focus Partners' opinions may change over time due to market conditions and other factors. Numerous representatives of Focus Partners may provide investment philosophies, strategies, or market opinions that vary. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.

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Investing

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About the Author

Kevin Grogan

Chief Investment Officer of Systematic Strategies

As Chief Investment Officer for Focus Partners, Kevin conducts investment research and writes articles on a wide range of topics, including retirement planning and investment policy. Kevin co-authored "The Only Guide You’ll Ever Need for the Right Financial Plan" with Larry Swedroe and Tiya Lim. This step-by-step handbook focuses on the art of investing by providing investors with information they can use to build a tailor-made investment strategy. Kevin holds an MBA from Saint Louis University and a bachelor’s of science in finance from Missouri State University in Springfield.