In this episode of Retire with Style, Wade Pfau and Alex Murguia explore alternative investments with a focus on natural resources, commodities, and catastrophe bonds. They break down the strategies and risks behind these asset classes and examine how they can fit into a diversified retirement portfolio. The conversation offers insights into the potential advantages and challenges of these investments for retirement planning.
Takeaways
- Natural resources include timberland, farmland, and water rights.
- Commodities can serve as an inflation hedge but are volatile.
- Catastrophe bonds transfer natural disaster risk to investors.
- Investing in companies that use commodities may be more beneficial.
- The correlation of commodities to equities is generally low.
- Catastrophe bonds can provide uncorrelated returns to the market.
- Investors should consider the expected return for each asset class.
- Due diligence is essential when exploring alternative investments.
- Infrastructure investments can offer stable returns through usage fees.
- The role of portfolio managers is to expose investors to asset classes with favorable risk-return profiles.
Chapters
00:00 Introduction to Alternative Investments 02:22 Exploring Natural Resources and Commodities 11:53 Understanding Catastrophe Bonds 21:18 Evaluating Risks and Returns in Catastrophe Bonds
Links
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This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”
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