Alternative Assets Make Up Majority of Endowments

A recent study on endowments shows that the allocations of alternative assets between 2002-2012 has grown dramatically.  Troy Vanderburg, CEO of the Alternative Investment Store, says that this shift cannot be ignored, in moving from traditional asset classes towards alternative investments.  The largest asset manager, Black Rock, was founded on alternative investments and they're still seeing growth today.  This study reflects much the same, where 835 different endowments were studied in an ongoing watch of how institutions are using endowments specifically for allocating assets.

The report showed that in 2002, for example, equities made up about 50% of endowments, with that number dropping to 31% in 2012.  Fixed income investments followed suit, dropping more than half from 23% to 11%.  What stunned Vanderburg was that traditional asset classes shifted directly to alternatives and alternative investments in the average endowment portfolio shifted from 24% to to 54%, now comprising the majority of any endowment's portfolio.

Vanderburg believes people assume hedge funds when talking about alternative investments, however the asset classes go far beyond that, to include royalties, energy, real estate, auto finance and very liquid paper marketplaces.  Due to the many disruptions in the credit markets over the past decade, there has been a great deal of credit opportunities in the alternative world.  "It's important that when people look at alternative investments, they view that just as they would traditional portfolio management," Vanderburg says, adding that the "world is waking up to the fact that alternative assets classes have grown exponentially and as an asset class itself, it can be broadly diversified and really adds stability to a portfolio."  

Hedge funds were originally introduced to hedge risks and as the markets become volatile, they will continue to produce strong results.  Alternative investments are perceived to have more risk, Vanderburg notes, and at the Alternative Investment Store, they define an alternative investment simply as one not correlated to a stock, bond or cash markets and is primarily driven by the skill set of a manager, to include a hedge or real estate fund.  They are looking to provide a positive, on-going return with the growth individuals need going forward.

Troy Vanderburg is CEO of the Alternative Investment Store and spoke with Alternative Investing News, providing online alternative investing video news content.  Alternative Investing News is a featured network of Sequence Media Group.  This video was brought to you by Vantage Self-Directed Retirement Plans

J.P. Dahdah

After graduating from The University of Arizona where he earned dual degrees in Finance and Marketing, Mr. J.P. Dahdah began his professional career in 1997 as a financial advisor with American Express Financial Advisors. In 1999, he founded Dahdah Global Wealth Management, LLC, a comprehensive wealth management company which specialized in working with business owners. In June 2004, Mr. Dahdah founded his second company, Entrust Arizona, LLC. Entrust Arizona provided self-directed retirement plan administration and custodial services to individuals and small business owners who desired to include non-traditional assets, such as real estate, as part of their tax-deferred and tax-free portfolios. Mr. Dahdah earned the Certified IRA Services Professional (CISP) designation by The Institute of Certified Bankers in 2007, and in 2009, he began hosting a weekly “Wealth Wednesdays” radio show on KFNN 1510AM. In that same year, the Arizona Small Business Association (ASBA) presented Entrust Arizona with “Arizona’s Companies to Watch” Award, an honor celebrating second-stage entrepreneurs. Experiencing an annualized revenue growth of 28%, Entrust Arizona’s client base grew to over 6,500 clients and $600M in retirement assets in less than seven years. A testament to the Company’s size, strength, and growth, Entrust Arizona re-branded and changed its business name to Vantage Retirement Plans, LLC, on January 3rd, 2012. Mr. Dahdah has been happily married since 2008 to his wife Erin and is the proud father of his daughter, Liliana Sofia and son, Juan Pablo II.