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Alternative Investments
Seek out uncorrelated and higher expected returns through funds that invest in less liquid and non-publicly traded securities.
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Mission Wealth has extensively researched and advised clients on alternative investments for over two decades. Our team can help clients identify the appropriate fund managers based on their individual risk and reward requirements. We have deep experience in helping clients construct a suitable portfolio that aligns with their long-term financial objectives.
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 and Direct Credit
Private and direct credit refers to non-public debt investments (a variation of traditional investment-grade, sovereign, or corporate debt) — where capital is lent directly to companies, real-estate projects, or specialty finance structures outside traditional syndicated markets. This can include direct lending, distressed debt, and specialty finance strategies.
These investments can provide income through interest payments and help diversify fixed-income exposure beyond public bonds and loans.
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Real Assets
Real assets are physical, tangible resources, such as commercial real estate, infrastructure (roads, bridges, utilities), energy assets, or timberland, whose value depends on underlying physical properties and cash flows.
These assets can generate rent or usage income and have historically shown lower correlation with pure equity markets — meaning they can behave differently from stocks and bonds.
Private Equity
Private equity comprises investments in privately held companies or the acquisition of public companies with the intention of taking them private. These funds seek to enhance company value through strategic, operational, or financial improvements over time.
Private equity targets long-term growth drivers by investing in companies before they are widely accessible in public markets.
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Read an Alternative Investments Testimonial from a
Mission Wealth Client
"My five-year adventure with Mission Wealth has been positive, especially once Shinaola became my advisor. Shinaola's proactive approach, depth of knowledge, positive attitude, and genuine care for our well-being and financial success provide me with great peace of mind. Shinaola also offers tax planning, which I rely on. Being a person who lives by dotting all the i's and crossing all the t's, Shinaola's thorough approach, including tax planning, has successfully dotted all the i's, and crossed all the t's for me, without my having to do any heavy lifting. I trust Shinaola and truly believe he wants the best for us, not just to make a buck.
As for Mission Wealth, the options for alternative investments led me to initially choose your company over others that offered only traditional stock and bond options. Although I don't have a comparison of how our assets would have fared had we chosen other options, I'm confident Mission Wealth was a wise choice.“
Testimonials appearing on this website have been received by actual current clients of Mission Wealth Management LP. The stock image used is for illustration only. All testimonials reflect the experiences of those who have used our services in some way or another. However, they are individual results, and results may vary. We do not claim that they are typical results our clients will or should achieve. The testimonials are not necessarily representative of all of those who will use our services. No compensation has been paid to any client in exchange for the testimonials appearing on this website. 00873289 03/26
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.
Investment Considerations for Those Seeking 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 carefully consider the investment objectives, risks, fees, and expenses of each fund before investing. This and other information are contained in each of the fund’s prospectuses, which may be obtained by contacting your investment professional or fund representative. Please read the prospectus carefully before investing or sending money.