Tracy Gallagher on the Importance of Alternative Investments in Today’s Market

Tracy Gallagher, Head of Alternative Investments at Arta Finance, Shares Insights on the Importance of Alternatives in Today’s Market

In a world filled with market volatility and uncertainty, alternative investments are becoming increasingly important for investors looking to diversify their portfolios and mitigate risk. Tracy Gallagher, the Head of Alternative Investments at Arta Finance in Mountain View, Calif., is a seasoned expert in the field, with a wealth of knowledge on the subject.

Gallagher, who previously worked at LGT Capital Partners in New York, believes that alternative investments can help investors weather the storm of market turbulence. In a recent interview with Jeff Benjamin, she highlighted the benefits of including alternative assets in a portfolio.

According to Gallagher, alternative investments offer a long-term orientation that can help offset the short-term fluctuations of public markets. With unrest in the Middle East and Europe, coupled with interest rate volatility and a major election year in the U.S., having a meaningful allocation to alternatives can provide stability and potential growth opportunities.

When asked about how advisors can get started researching alternatives, Gallagher emphasized the importance of understanding the mechanics, benefits, and risks of each asset class. From private equity to real estate to private credit, each alternative investment plays a unique role in a portfolio.

Gallagher recommends resources like David Swenson’s book, Pioneering Portfolio Management, which delves into the world of alternative asset classes. She also suggests that investors consider allocating between 20% and 30% of their portfolios to alternative investments, depending on their liquidity needs.

Addressing concerns about higher fees and lower liquidity associated with alternative investments, Gallagher points out that investors should focus on net returns after fees. Despite the higher fees and longer lock-up periods, alternative investments like private equity have historically outperformed global equities over the long term.

Overall, Gallagher’s insights shed light on the importance of alternative investments in today’s market environment. As investors navigate uncertain times, considering alternative assets may be a wise strategy to enhance portfolio diversification and potentially boost returns.