What else can you invest in? How alternative investments are shaping the market

 

Here are three reasons why you should listen to this episode:

1. Understand the rise of alternative investments and why public markets are no longer the full picture.
2. Learn how private equity, private credit, and real assets can enhance diversification and hedge against inflation.
3. Gain clarity on how everyday investors can access and implement alternatives in traditional portfolios.

Resources

• Alternative investments enter the mainstream
• CIBC's "Smart Advice" Podcast and Website - Website | Apple Podcast | Spotify
• Visit CIBC for more Smart Advice
• Meric Koksal: LinkedIn

Episode Highlights

[00:20] The Growth and Potential of Alternative Investments

• Traditional investment strategies may no longer be enough for long-term growth.
   
• The public markets are shrinking, and fewer companies are going public.
   
• With over 20 years of global experience, Meric Koksal explains how alternatives like private equity, private credit, and real assets are gaining popularity among Canadian investors.

[03:20] Meric: “With the public markets shrinking and companies staying private longer, it really fueled the growth of these alternative investments or another way to talk about it is the private investments.”

 

[03:33] Examples of Alternative Investments

• Private equity includes investments like growth equity and venture capital, giving investors ownership in private companies.
   
• Private credit is non-bank lending, where funds lend directly to private businesses.
   

[05:02] Meric: “Private credit, which we hear a lot about, and it's arguably the fastest growing pillar within alternatives … for instance, a fund manager may be lending money to a soccer team to support a stadium construction.”

 

• Real assets are physical assets like infrastructure and natural resources that provide investment opportunities.
   
• Meric highlights these alternatives as key pillars in today’s investment landscape, especially in Canada.
   

[07:00] Benefits of Private Investments

[7:03] Carissa: “I found it surprising that 90% of companies are privately held. They're not listed on public markets. As you mentioned, public markets are just like a sliver of the pie, and it seems like we're missing out on that broader universe.”

• Private investments often offers higher returns due to lower liquidity compared to public markets.
   
• These investments provide unique opportunities not available in public markets.
   
• Private equity has a low correlation to public markets, making it a strong diversification tool.
   

[11:16] Meric: “In a nutshell, these product alternatives provide great benefits to clients from higher income potential, higher return potential, without introducing any additional risk portfolio while you're providing some inflation hedging.”

[11:46] Misconceptions About Alternative Investments

• Many investors still think alternative investments are too complex or opaque.

[13:01] Meric: “What used to be, you need to have a $5 million investment to even start talking about these investments is now accessible for as little as $25,000.”

• Monthly asset valuations and detailed reporting have made alternatives more transparent.
   
• Quarterly liquidity options are available, but these remain long-term investments.
   

[15:44] Integrating Alternatives into Traditional Portfolios

• Meric proposes a 50/30/20 framework: 50% equities, 30% fixed income, and 20% alternatives.
   
• Replacing some equity and fixed income allocations with alternatives increases diversification and yield.
   
• Private equity can replace public equity, while private credit and real assets can replace fixed income.
   
• Infrastructure investments offer both growth and steady income within the real assets pillar.
   

[19:06] Advisors' Role in Alternative Investments

• Financial advisors play a key role in ed