Arthur Salzer Discusses the Challenges of Investing in Liquid Alternatives
Updated: Apr 26, 2020
Arthur Salzer isn’t sold. The CEO and CIO of Northland Wealth Management has been a long-time advocate of alternative investing but notes that both “real” and liquid alts require significant due diligence and research legwork on the part of investors and advisors.
“It’s nice that [liquid alts] are there, it’s good to have more choices, but it takes a lot of due diligence to understand what makes these funds tick,” Salzer told WP. “I’m not sure how somebody who’d be buying a hedge fund strategy on the public market would know how to do three to six months of due diligence to go through the underlying mechanics.
“It’s good that they’re available, and there are some really good ones and some really mediocre ones but it takes a lot of work. We’ve got five professionals with CFA designations on staff to do that due diligence.”
He thinks that investors and advisors who can’t do the due diligence to sort out which liquid alt funds work for them should look to other asset allocation strategies that offer lower fees.
Despite his trepidation around liquid alts, Salzer’s “real” alts strategy has largely paid off for his investors in the downturn. He employs what he calls a “new 60-40” where 40 per cent of the portfolio is made up of private alternative investments. At the lowest point, when markets were drawn down around 30 per cent, his office hit a nadir of -10%. Most of his families, now, sit only a little bit below where they were at the start of 2020.