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Are you invested in a "Balanced Fund"?

If you're like most investors,  the generic balanced or moderate portfolio has been a staple in your retirement accounts for the last 40+ years.  And for the last 40 years this has made sense, until now. 

So what changed?  Interest rates.

With interest rates volatility, the bond portion of your balanced portfolio is no longer doing its job.  In English, the traditional balanced portfolio no longer works.

Where is the Smart Money Investing?

The most sophisticated investors in the world are allocating more of their assets to Alternative Investments due to chronically low bond yields, extreme central bank intervention, and the threat of overheated stock valuations.


They believe that Alternative Investments will give them a better chance of achieving sufficiently higher returns to meet future obligations while protecting against excessive downside risk.

Endowment Funds Vs Traditional Portfolio

Pension Style Investing


Goodbye Traditional 60%/40% Portfolio – High-interest rates during the 80’s and 90’s supported the case of the “balanced” portfolio. Today, volatile equity markets coupled with increasing interest rates and low return bonds have created headwinds for the investment community.

Barrons, JP Morgan, and Bank of America all say your traditional 60/40 retirement portfolio is dead. In fact, JP Morgan says your 60% equity and 40% fixed income portfolio will only be expected to generate 3.2% annually going forward. For the majority of Canadians, 3.2% after inflation and taxes simply will not work!

Hello New Pension Fund Style 60% / 40% Portfolio – At Fundamental Wealth, we believe an asset mix (as shown here) 40% Tactical Equities, 60% Alternatives.

Now, I know what you're thinking. 

If this is so good, why isn't everyone doing it?


Why Alternatives?

Investing in private equity, private debt and private real estate companies is not new, but for the most part, has only been accessible by institutional investors such as pension and endowment funds, charitable foundations and the ultra-high-net-worth.

For years now pension funds like CPP and endowment funds like Yale have been rebalancing the their investments to better align  with the changing investment landscape. 

So why are they doing this?

Let's have a look at the numbers.

CPP Portfolio
Institutions vs Individuals

Figure 4: US Endowment Annualized Performance Over 20 Years

Endowment Annualized

Source: Yale University Financial Report, Princeton Reports of the Treasurer, Harvard University Financial Report, Stanford University Financial Report. * Princeton Alternatives allocation does not include the years 2000-2004 as the financial report did not provide breakdowns of the assets. **The indexes used to mimic the Equity and Fixed Income portfolios are S&P 500 Index and Merrill Lynch Global Corporate Index. Returns are based on June Fiscal Year. Time period: June 1999-June 2019

Allocation & Benefits

Diversification – Different asset classes with different investment/risk profiles results in lower risk when combined in a portfolio.

Low Correlation – With the recent invention of ETF’s we’ve seen a big uptick in Fixed Income & Equity correlation, alternatives have low to zero correlation with equity markets and traditional fixed income options, creating a more efficient portfolio.

Reduced Drawdowns – Uncorrelated assets will perform differently at different times. Alternatives perform more consistently with lower volatility, protecting portfolios from large drawdowns or losses.

Risk -Adjusted Returns – With lower volatility than fixed income and equity, but high-income streams, alternatives provide better risk-adjusted returns.

Investor Satisfaction – Lower volatility, reduced drawdowns, and more consistent income streams create a happier, more satisfied client.

For retirement investors, the ability to diversify investments to match what "smart money" is doing has been non-existent. 

Until now.

Couple our solution with advice from a Certified Financial Planner PROFESSIONAL and you can rest assured you will have a sustainable retirement.

Guidance Now & For Your Future

Learn more about the wealth management process or get started now by selecting one of the option below.

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