Alternative investments make for a very large umbrella, given that they are generally defined as anything outside of stocks, bonds or cash. Among them are private equity, real estate, commodities, collectibles, hedge funds and venture capital, and everything in between.
In our special report on alternatives throughout May, Canadian Family Offices will take a closer look at an asset group that has been playing an increasingly key role in the portfolios of family offices. Alternatives hold out the promise of diversification, lowered volatility and enhanced returns, while to varying degrees being seen as non-correlated to public financial markets.
Beyond the typical categories such as real estate and private equity, some firms are going further afield into non-traditional assets that can diversify an ultra-high-net-worth portfolio. Those include cryptocurrency and crowdfunding, and even more extreme alternatives such as crypto-farming, fraction investing in big-league sports and buying antique luxury watches. They are gaining in popularity, albeit slowly in the often-conservative world of family offices.
One thing is certain: The alternatives space is growing, both in breadth of products and in popularity, and the category is more diverse than ever before.
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It’s not just family offices getting in on the trend, of course. According to a report from Toronto-based Investor Economics, the Big Six banks’ brokerage divisions and other full-service investment dealers have increased their assets under management (AUM) in alternatives significantly over the past five-plus years. The full-service brokerage channel has seen a compound annual growth rate of 22 per cent in alternatives AUM during that period, while the number of product options has increased by 12 per cent annually, according to the Globe and Mail.
To kick off our coverage on alternatives and explore the forces driving their growth in family offices portfolios, Canadian Family Offices’ Senior Producer Ashley Redmond sat down with Martha Simmons, co-chief operating officer at Forthlane Partners, a Toronto-based multi-family office. Their wide-ranging discussion covers Canadians who are not looking outside our borders for portfolio diversification as well as the general role alternatives play.
Join our panel discussion on alternative investments on May 22: As part of our Special Report this month, Canadian Family Offices is hosting a panel discussion on alternative investments and their growing importance in family office portfolios. To register, click here.
Our expert panel includes:
- Dale Powell, Director, Investments, Citibank Private Wealth
- Christopher Foster, CEO, Foster & Associates
- Dan Riverso, CEO/CIO, Jesselton Capital Management
- Robin Tessier, Partner and Head of Product & Solutions, Canada, Sagard
Transcript highlights
Ashley: My name is Ashley Redmond for Canadian family offices, and I’m here with Martha Simmons of Forthlane Partners. Martha, thanks so much for joining me.
Alternatives is a large umbrella. Private equity, hedge funds, real estate, maybe even an enviable wine collection. What are your clients looking for in 2025 in the alternative space?
Martha Simmons: Our clients are all different. But typically, they’re looking for stability in the chaotic world. So, what we do is we curate portfolios for them that are globally diversified and diversified across asset classes, including alternatives, to be able to provide for that smooth growth.
They may do other alternative asset classes, such as VC or wine collecting or car collecting on the side. But we really try to provide them that holistic portfolio—we call it our Safe Capital portfolio—to provide that steady growth.
Ashley Redmond: Is it fair to say alternatives are more popular today from your perspective than they were a few years ago?
Martha Simmons: Yeah, I think that people are realizing that their preconceived notions about alternatives, that they are a riskier asset class, … I think people are realizing that doesn’t have to be the case.
When we started Forthlane, we started with the perspective of bringing institutional investing, which used to be only available to very sophisticated institutional investors, to Canadian families. And so part of that is bringing in alternatives. That’s been at the root of our strategy from the very beginning. But we are recognizing that people are coming with a bit more knowledge, a bit more acumen around what benefits alternatives provide. Because they really do—contrary to what people might have believed before—they actually can be a quite a less risky asset class, depending on where/what asset class within alternatives that you’re investing in. And you can counteract against some of the problems with the traditional 60/40 portfolio.
Ashley Redmond: Martha, why is it so important to diversify across asset classes, using things like alternatives, and maybe even staying away from that traditional 60/40 approach?
Martha Simmons: The key is to reduce volatility. The traditional approach that has worked for many, many years isn’t necessarily going to work forever. So being able to spread out that risk, reduce volatility, you know, diversify across asset classes, across geographies as well, [is important]. Canadians are typically quite heavily invested in Canada. And really taking that global perspective, as we see the world has been going through lots of chaos over the last several years, we just have to look at things a different way. And diversification really can be key to that.
Ashley Redmond: Thank you. Martha.
Martha Simmons: Pleasure.
Join our panel discussion on alternative investments on May 22: As part of our Special Report this month, Canadian Family Offices is hosting a panel discussion on alternative investments and their growing importance in family office portfolios. Our expert panel includes:
-Dale Powell, Director, Investments, Citibank Private Wealth
-Christopher Foster, CEO, Foster & Associates
-Dan Riverso, CEO, Jesselton Capital Management
-Robin Tessier, Partner and Head of Product & Solutions, Canada, Sagard
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