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Jason Zweig believes alternative assets do not belong in 401(k)s.
"Whether we’re talking about a smaller firm like Redwood or the giants of alternative investing, the same rule applies: Assets that don’t trade every day aren’t low risk just because they don’t trade every day. And, until costs come down and conflicts of interest are ironed out, stuffing private assets inside a fund that does trade every day is a rotten idea for retirement savers."
Jason Zweig believes alternative assets do not belong in 401(k)s.
"Whether we’re talking about a smaller firm like Redwood or the giants of alternative investing, the same rule applies: Assets that don’t trade every day aren’t low risk just because they don’t trade every day. And, until costs come down and conflicts of interest are ironed out, stuffing private assets inside a fund that does trade every day is a rotten idea for retirement savers."
Other than TIAA RE, which has proven itself over the years, I think Jason is spot-on correct, as I mentioned earlier. The average person is not in a position to research (or understand) the nuances and intracasies of illiquid investments ... heck, most people have no idea about things like 'fundamentals' or 'moats' or whatnot when it comes to just buying *stocks*.
Bloomberg news ran an article yesterday ( which of course I can't find now) pointing out the fact that this push for PE in Retirement funds comes just as PE returns have crashed, it has become enormously "popular" with consequent lower returns as many PE funds don't know what they are doing, and many University endowments are selling PE because either they need liquidity or it has not preformed
Jeffrey Ptak from M* discovered that the Redwood Private Real Estate Debt interval fund recorded a loss on just three days since its June 2023 inception. This fund gained 7.2% a year from 07/01/2023 - 04/30/2025 with a standard deviation of just 0.5%! Only thirteen OEFs/ETFs had a higher Sharpe Ratio (4.0) over this time period. As it turns out, seven other interval funds (out of 79 total) delivered a higher Sharpe Ratio than the Redwood fund during the same period. Are some interval funds too good to be true? Caveat emptor!
Jeff DeMaso from The Independent Vanguard Adviser recently wrote about private investments. Everyone can read part of this article but the entire article can only be read by paying subscribers.
Executive Summary: Private markets are being pitched as the next frontier for everyday investors— with Vanguard now joining the push. But don’t believe the hype. Alternative investment funds are expensive, opaque and illiquid. Their risk-reducing qualities are oversold. And unless you have access to the best managers, private investments are more likely to add complexity to your portfolio than improve performance.
Comments
"Whether we’re talking about a smaller firm like Redwood or the giants of alternative investing,
the same rule applies: Assets that don’t trade every day aren’t low risk just because they don’t trade every day.
And, until costs come down and conflicts of interest are ironed out, stuffing private assets inside a fund
that does trade every day is a rotten idea for retirement savers."
https://www.msn.com/en-us/money/savingandinvesting/this-new-investing-idea-isn-t-right-for-your-retirement-plan/ar-AA1EUSqV
Article - Possibly what you’re referencing
:
recorded a loss on just three days since its June 2023 inception.
This fund gained 7.2% a year from 07/01/2023 - 04/30/2025 with a standard deviation of just 0.5%!
Only thirteen OEFs/ETFs had a higher Sharpe Ratio (4.0) over this time period.
As it turns out, seven other interval funds (out of 79 total) delivered a higher Sharpe Ratio
than the Redwood fund during the same period.
Are some interval funds too good to be true?
Caveat emptor!
https://jeffreyptak.substack.com/p/what-new-sorcery-is-this
Everyone can read part of this article but the entire article can only be read by paying subscribers.
Executive Summary: Private markets are being pitched as the next frontier for everyday investors—
with Vanguard now joining the push. But don’t believe the hype.
Alternative investment funds are expensive, opaque and illiquid.
Their risk-reducing qualities are oversold.
And unless you have access to the best managers,
private investments are more likely to add complexity to your portfolio than improve performance.
https://www.independentvanguardadviser.com/do-you-really-need-private-investments/
FD: Welcome to my world
Take a look at HOSIX, the volatility is minimal = 1.2, performance at 9.8% annually.
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=17HLSk91w93309cdcjzCe5