Stock markets are soaring, but there is a case to be made for alternatives

financialpost.com:

As the broader S&P 500 continues to soar, gaining more than 6.5 per cent already this year, it’s pulling up other markets toward new highs, but here’s the dilemma: those sitting on excess cash may wonder whether now is the right time to deploy those dollars.

After all, near-term cash investments still yield around five per cent interest and some have also started exploring alternative assets that may not have the same kinds of ups and downs as the public markets, including:

Last week, I had the privilege of moderating a panel discussion at the Canadian Association of Alternative Strategies & Assets’ annual Wealth Managers’ Forum Conference on this very topic. Most of the advisers I surveyed in the room indicated they had allocated five per cent to 10 per cent of their portfolios to alternatives.

This might be higher than the Canadian average, but we anticipate a similar trend of growing interest in the United States. Alternatives now constitute 9.1 per cent of high-net-worth client portfolios, up from 7.7 per cent in 2020, according to a recent report by Cerulli Associates.

Currently, our tactical risk-managed balanced strategy allocates approximately five per cent to alternatives. However, with additional new cash inflows, we’re considering boosting this allocation.

One area that has piqued our interest is the infrastructure space, which encompasses three key themes: digital infrastructure, reshoring/manufacturing and the energy transition.

With the rapid growth of artificial intelligence, more and more companies are embracing digitalization, seeking to enhance efficiency, connectivity, and resilience. For example, investments in digital technologies by energy companies have surged in recent years, with global spending