Podcast: The Truth About Alternatives

Libretto Team

This podcast episode was originally produced and published by Dimensional Fund Advisors.

How much of your portfolio should really be invested in alternatives?

For ultra-high-net-worth investors and families, alternative investments have long been viewed as a path to diversification, exclusive access, and potentially higher returns. But are they always worth the complexity, illiquidity, fees, and taxes that come with them?

We take a critical look at the world of alternatives—from hedge funds, private equity, and venture capital to private real estate and other non-public investments. We explore where returns actually come from, looking at the impact of enterprise risk, financial engineering, and manager skill, and examine whether those sources of return truly justify the additional costs and complexity.

We also discuss the role of liquidity, diversification, taxation, manager selection, and investment purpose when evaluating alternatives. Are private investments genuinely less volatile, or do appraisal-based valuations simply make them look that way? And as access expands beyond institutions and ultra-wealthy families into vehicles such as 401(k) plans, are investors really gaining access to the same opportunities?

Finally, we look at one of the original homes of alternative investing: endowments. If institutions with long time horizons, sophisticated investment teams, and access to top-tier managers have not consistently outperformed comparable public-market portfolios, what should individual investors conclude?

In Episode 57 of The Informed Investor, Dimensional’s Mark Gochnour, Head of Global Client Services, sits down with Jeff Coyle, founder and CEO of Libretto. The takeaway: Alternatives aren’t inherently good or bad—they need to be deconstructed, evaluated, and compared against the public markets with a clear understanding of where the return comes from and what you’re paying to get it.

Hear more from Jeff

Important disclosure:

Libretto’s participation in this podcast should not be construed as an endorsement or recommendation of Dimensional Fund Advisors LP, its affiliates, or any investment product or strategy.

Nothing contained herein is intended to, or shall, constitute accounting, legal, tax, security or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Readers should be aware that all investments carry risk and may lose value.

This interview references information obtained from sources believed to be authentic and highly regarded. Reasonable effort has been made to reference reliable data and information, but we do not assume any responsibility for the validity of all references or for the consequences of their use. Certain information contained herein may be dated and no longer applicable: information was obtained from sources believed to be reliable at time of original publication, but not guaranteed.

This material is being provided for informational and educational purposes only and nothing contained herein should be considered, or is, investment advice or a recommendation to buy or sell any securities. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results.

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