Bob Kargenian’s Letter Published in InvestmentNews
Bob Kargenian was quoted in a Letter to the Editor in InvestmentNews, a leading source for news, analysis and information essential to the financial advisory community.
In his letter, entitled “Be wary of alternatives,” Bob Kargenian said, “There is good reason as to why advisers should be skeptical in adding alternatives to client portfolios to hedge against stock market risk (‘Advisers are slow to act on alternative investments,’ Devin McGinley, March 2, 2020).
“Even in the current downturn, in addition to the past 10 years, MLPs, commodities, managed futures and hedge funds have done nothing but add to the losses of a diversified portfolio, and usually with considerably higher expenses. Only gold has really added any value in both the 2008 drop and recently, but its long-term record is questionable.
“There’s much to be said for keeping things simple. If one wants to hedge against stock market risk, either raise cash or buy short- to intermediate-term government bond funds (or even long-term governments, if you’re a daredevil).
“All of the other stuff, including private equity, doesn’t work, and adds considerable expense to boot.”