June 2026
Alternative investments are assets that fall outside traditional stocks and bonds. They include strategies designed to generate returns that should be driven by factors independent of public market performance.
Unlike stocks, which rise and fall with investor sentiment and economic cycles, many alternative investments generate returns based on the terms of a loan, the cash flow from a real asset, or the performance of a specific industry. That independence is what makes them valuable in a diversified portfolio.
Morton Wealth has been investing in alternatives since the early 1990s, long before they were widely available to individual investors. Today, alternatives make up a meaningful portion of most client portfolios — not as a novelty, but as a structural component of how we aim to build resilient portfolios.
For investors in Calabasas, Thousand Oaks, Westlake Village, and across the greater Los Angeles area, the case for alternatives starts with a simple observation: the traditional 60/40 stock-and-bond portfolio can be more fragile than most people realize.
In 2022, the broad bond index fell 13%. U.S. stocks fell significantly at the same time. Investors who believed bonds would protect them during a downturn found that both sides of their portfolio moved in the same downward direction simultaneously. That is not diversification — it is the illusion of it.
Alternatives address this by introducing investments whose performance is driven by different forces. These investments are not immune to economic stress, but they are exposed to different risks — and in a portfolio context, that difference matters. The goal is to incorporate investments that will hold their own, even in a challenging market or economic environment.
Every year, our investment team evaluates a large number of alternative investment opportunities. Only a small number make it into client portfolios. Each opportunity is assessed on five criteria:
We ask of every alternative investment: what happens if things go sideways? If there is no satisfying answer to that question, the investment does not belong in a client portfolio.
Our philosophy is built on three principles:
Build for resilience, not prediction. Nobody can reliably forecast markets. Instead of designing portfolios around what we think will happen, we design them to withstand what we can't predict. We ask of every investment: what is the downside scenario, and what is the back-up plan? The goal is a portfolio designed to support your financial plan across a range of potential economic environments.
Diversify where it actually counts. Most portfolios call themselves diversified, but the individual components still move together when markets get difficult. For decades we have looked beyond the familiar, seeking opportunities where others aren't looking — because that's where investments are typically less crowded, more fairly priced, and more likely to behave differently when it matters most.
Generate consistent income. Your portfolio should do more than grow on paper. We consider income generation as a structural part of every portfolio: consistent cash flow that can be reinvested, spent on meaningful life experiences, or replace your income in retirement.
Alternatives have a complicated reputation, and not without reason. Here are the most common mistakes:
Oversizing the allocation. Alternatives that involve illiquidity need to be sized appropriately. A portfolio overloaded with illiquid investments loses flexibility at exactly the wrong moment.
Insufficient due diligence. The alternative investment space is large and uneven. Evaluating hundreds of deals to find a handful worth owning takes time, expertise, and discipline. Shortcuts are expensive.
Chasing trends. The market always has something new and exciting to offer. The question to ask is not 'could this go up?' but 'what is it actually worth, and what happens if I am wrong?'
Confusing complexity with quality. Some alternatives are complex because the underlying opportunity is genuinely difficult to access. Others are complex because the fees are buried or the risk is obscured. Complexity should prompt deeper questions, not greater trust.
Gold is often viewed by investors as a store of value. Its purpose is not to generate outsized returns — it is to protect purchasing power over time in a way that paper currency cannot.
The U.S. money supply typically doubles about every 11 to 12 years, meaning the value of each dollar erodes at approximately 6% per year. When a portfolio grows from $1 million to $2 million over a decade, the relevant question is not whether the number got bigger — it is whether purchasing power actually increased.
Gold cannot be printed. In an environment of rising government debt, continued deficit spending, and monetary expansion, gold serves as a counterweight to that risk.
We own gold as insurance against dollar debasement. If gold generates poor returns going forward, the implication is that the dollar has held its value and the rest of the portfolio has done well. That is the outcome we hope for.
Morton Wealth has maintained a gold allocation in the majority of its client portfolios since 2015. Since initiating that position in August 2015, gold has generated double-digit returns. That performance exceeded our expectations and reflects the environment we have been in. The underlying rationale remains intact.
A resilient portfolio is one that can support your financial plan across a wide range of economic outcomes — not just when everything goes right.
Alternatives can improve resilience in three ways:
Income independence. Many alternative investments generate cash flow from sources unrelated to public stock or bond market performance. That income is designed to continue even when the stock market falls.
Uncorrelated returns. Investments that respond to different economic drivers tend to behave differently during market stress. A portfolio with meaningful exposure to uncorrelated alternatives is less likely to experience severe simultaneous drawdowns.
Tangible downside protection. Asset-backed strategies can provide structural protections — collateral, accelerated principal payback, ownership rights — that pure equity positions may not.
Morton Wealth has been building portfolios this way long before alternatives became mainstream. The specific investments have evolved, but the conviction has not: a portfolio that relies entirely on public markets to perform well is more fragile than it needs to be.
What percentage of a portfolio should be in alternative investments?
There is no universal answer. At Morton Wealth, most client portfolios carry a meaningful allocation to alternatives — often 50% or more — but the right level depends on your total net worth, income needs, time horizon, liquidity requirements, and risk tolerance. We typically target stock allocations in the 10-40% range, well below the industry standard of 50-80%.
Are alternative investments risky?
All investments involve risk, including the loss of principal. Some alternatives carry additional risks including illiquidity, complexity, and longer time horizons. The relevant question is not whether an investment carries risk — they all do — but whether the risk is understood, appropriately sized, and compensated by the expected return.
Most private alternative investments are available only to accredited investors or qualified purchasers. Morton Wealth works primarily with clients who meet these thresholds. Some alternative strategies may be available more broadly.
How is Morton Wealth different from other firms when it comes to alternatives?
Most wealth management firms treat alternatives as a small supplemental allocation. Morton Wealth has built its entire investment philosophy around alternatives since the 1990s. Our investment team evaluates hundreds of opportunities each year, and our due diligence process is designed specifically for private and alternative strategies.
Does Morton Wealth work with clients in Thousand Oaks, Westlake Village, and Ventura County?
Yes. Morton Wealth is headquartered in Calabasas and serves clients across Los Angeles County and Ventura County, including Thousand Oaks, Westlake Village, Agoura Hills, and surrounding communities.
What is a 'store of value' and why does it matter for my portfolio?
A store of value is an asset that maintains its purchasing power over time. Gold is the most widely recognized example. In a world where paper currencies are gradually diluted through money printing and government debt expansion, owning assets that cannot be printed — like gold or real property — can provide a hedge against the erosion of your wealth.
This newsletter is presented for educational purposes only and should not be relied upon for investment recommendations. References to specific investments are for illustrative purposes only. Consult with your financial advisor to thoroughly review all information before implementing any transactions or strategies concerning your finances.
Returns for gold referenced herein reflect capital appreciation and the reinvestment of dividends and capital gains, if any, as well as all fees and expenses. Commodities and commodity index-linked securities may be affected by changes in overall market movements and other factors such as weather, disease, embargoes, or political and regulatory developments.
All investments involve risk, including the loss of principal. Alternative investments may only be available to eligible clients and involve a higher degree of risk, including illiquidity. Past performance is not a guarantee of future results. This page is for educational purposes only and does not constitute investment advice. Morton Capital Management, LLC dba Morton Wealth is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training.
