July 3, 2025

Alternatives
in
Modern
Portfolios
-
Canadian
Retail
Investors
Lag
in
the
Adding
Alts
to
their
Portfolios

In this paper, we highlight the significant underutilization of alternative investments by Canadian retail investors, whose allocations remain below 5%, in stark contrast to the ~50% allocation typical of ultra-high-net-worth individuals and institutional portfolios. We argue that legacy 60/40 portfolios are overdue for an update and advocate for a more modern allocation—20% alternatives, 50% equities, and 30% fixed income—more reflective of institutional practices. We believe that alternatives can offer considerable benefits, including stronger risk-adjusted and absolute returns, lower correlations with traditional assets, inflation protection, consistent income, and reduced overall portfolio volatility. Despite these well-documented advantages, retail adoption remains limited. Through this paper, we aim to encourage broader consideration of alternatives while emphasizing that our views are general in nature and not intended as investment advice.

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