Alternatives Update

Alternatives update

Up, Down, All Around

2024 Wealth Management Bulletin     

Chris Robinson, CIMA®
Senior Vice President
Trust Investment Officer
513-932-1414 ext. 59106
Alternative investments refer to financial assets that fall outside the conventional investment categories, which typically encompass stocks, bonds, and cash. When allocating to alternative investments, our primary goal is to enhance the risk adjusted return of the overall investment portfolio. This is primarily achieved because alternative investments provide low levels of correlation to traditional categories, reducing the portfolio’s overall risk. As a general guideline, the alternatives allocation should, at a minimum, keep up with inflation – this task has been challenging lately given the spike in inflation witnessed in 2022.

Over the past few bulletins, Erin has highlighted the First Trust Long Short Fund, FTLS. This was the primary alternative asset exposure for our clients in 2023. While FTLS did not match the S&P 500’s lofty 26% return in 2023, it did outpace inflation and return investors a still impressive 16.93%.

As Erin mentioned above, the Fed announced they have reached a peak and the next move in the Fed Funds rate is likely lower. This news helped push alternative currency investments higher: gold returned investors 11.61% and Bitcoin was up over 50% in the last 3 months of the year. Unfortunately, oil fell almost 20% in the same time frame and more than outweighed gold’s increase – the commodity index as a whole declined almost 5% in the 4th quarter and lost nearly 8% for the year.

LCNB National Bank (“Financial Institution”) provides referrals to financial professionals of LPL Financial LLC (“LPL”) pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for brokerage or advisory services.

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