Alternative Investments

Seek out uncorrelated and higher expected returns through funds that invest in less liquid and non-publicly traded securities.

Mission Wealth has researched and advised clients on alternative investments for nearly two decades. We help clients identify the appropriate fund managers based on their risk/reward requirements, and we have significant experience helping clients construct a suitable portfolio that meets their long-term financial goals.

What are Illiquid Alternative Investments?

Illiquid Alternative Investments are financial assets that are not typically traded publicly and do not fit into traditional investment asset classes (e.g., stocks, bonds, or cash). Because of the complex and illiquid nature of the underlying strategies, most alternative investment assets have historically only been held by large institutional investors, accredited qualified purchasers, and high-net-worth individuals.

Mission Wealth offers access to various types of alternative investments, including Private Credit, Real Assets, and Private Equity.

Types of Alternative Investments

Private Credit

A variation of traditional investment grade, sovereign, or corporate debt. This includes illiquid alternative credit such as direct lending, distressed debt, and specialty finance.

Real Assets

Physical assets that have value due to their substance and properties, such as real estate and infrastructure, often offer a relatively steady income stream.

Private Equity

Direct investments in private companies or buyouts of public companies, where managers look to add value through restructuring or enhancement of operations.

General Benefits of Illiquid Alternatives

Alternatives can provide access to unique investment opportunities, offering the potential for enhanced return and yield over those typically available in daily liquid public markets, such as “traditional” stocks and bonds.

Illiquid alternative funds may provide investors with access to a persistent liquidity premium. For example, the liquidity premium for Private Equity has been 5.26%, while the liquidity premium for Private Credit has been 4.82%.*

Alternative strategies may offer attractive risk profiles with lower levels of volatility than equities by helping to diversify investment portfolios.

Historically, illiquid alternatives have been reserved for larger, institutional-type investors (think large pension plans, endowments, etc.), but through our strategic partnerships, we are able to offer them to our clients, where appropriate**. We partner with managers with extensive experience and track records managing these unique opportunity sets.

*All numbers are annualized. Private Equity liquidity premium is as of March 2023 and is calculated using the annual return for the Cambridge Private Equity Index minus the Russell 3000 Index, for the period Sep 2004 through March 2023. Private Credit liquidity premium is as of March 2023 and is calculated using the annual return for the Cliffwater Direct Lending Index minus the S&P/LTSA U.S. Leveraged Loan Index, for the period Sep 2004 through March 2023.

Additional Considerations for Alternatives

Many illiquid alternative investments offer attractive return potential, but these returns do not come without taking some form of risk.

A key consideration is liquidity. These strategies are not daily liquid funds; investors cannot simply buy in and sell out of the funds on any given day; in most instances investments will be committed for a period of years. Some funds have quarterly liquidity, but may be subject to fund level gates. As such, investors should consider these opportunities as long-term investment commitments and not rely upon them to fund short-term cash needs.

These strategies are also not guaranteed to make money in all environments. Despite each having attractive, long-term expected returns and relatively low expected volatility, these strategies may experience periods of negative returns.

**Alternative investments involve specific risks that may be greater than those associated with traditional investments and may be offered only to clients who meet specific suitability requirements, including minimum net worth tests. You should consider the special risks with alternative investments including limited liquidity, tax considerations, incentive fee structures, potentially speculative investment strategies, and different regulatory and reporting requirements. You should only invest in alternative investments if you do not require a liquid investment and can bear the risk of substantial losses.

Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. There is no assurance that any investment will meet its investment objectives or that substantial losses will be avoided. Diversification and asset allocation do not ensure a profit or protect against a loss.

Investors should consider the investment objectives, risks, charges and expenses of each fund carefully before investing. This and other information are contained in each of the fund’s prospectus, which may be obtained by contacting your investment professional or fund representative. Please read the prospectus carefully before you invest or send money.