Hedonova's Alternative Investment Fund Is Here to Bring Your Portfolio Into the 21st Century

Hedonova's Alternative Investment Fund Is Here to Bring Your Portfolio Into the 21st Century

New alternative investment funds like Hedonova make it easy to diversify your portfolio with crypto, venture capital, real estate and more.

Hedonova's Alternative Investment Fund Is Here to Bring Your Portfolio Into the 21st Century
Liz Aldrich

Published Jun 29, 2022Updated Jul 12, 2022

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In 2021, knee-deep in a bear market, institutional investors expressed worries that the traditional 60/40 portfolio (60% stocks and 40% bonds) would no longer be able to deliver the risk-adjusted growth it once had. 

The idea that a diversified portfolio of alternatives could potentially do a better job of providing the modern investor with outsized returns while shielding them from losses in the market isn't just a hypothetical anymore.

Goldman Sachs asked, "Is the 60/40 Dead?," and, after analyzing several thousand professionally managed investment portfolios, concluded that it was. J.P. Morgan warned that the stock market couldn't continue delivering such impressive returns in the future, and that bonds are increasingly correlated with stocks. These muted diversification benefits paired with low returns and increasing volatility would leave traditional investors in a tough financial position.

With a portfolio invested exclusively in stock and bond markets, investors are missing out on significant growth, at best—at worst, they're left without protection when markets start to crumble.

They were right. During the first half of 2022, (from January 1 to June 14), the S&P 500 fell 21.63%. Bonds followed in suit, falling 14.78%. 

While they didn't crash quite as hard as stocks, bonds alone clearly aren't offering adequate diversification benefits either. If you'd invested $100,000 into the stock market on January 1, your investment would be down to $78,370 by June 14—a total loss of 21.63%. If you'd invested that money into a "diversified" 60/40 portfolio, your account would be down to $81,110—a total loss of 18.89%.

In other words, allocating 40% of your portfolio to bonds offers very limited protection nowadays. So what does an effective portfolio look like going forward?

Alternative investments are the future of diversified portfolios

Since the stock market began to fall at the start of 2022, a number of alternative assets have performed well, suggesting that a diversified portfolio of alternatives could do a much better job of shielding investors from loss than a portfolio allocated only to traditional investments. 

For example, wine, whiskey, art, farmland and agriculture, real estate, and oil all produced positive returns during the first half of 2022. In addition to increased diversification, alternative assets often offer lower volatility, uncorrelated returns, and the potential for outsized returns.

The ultra-wealthy have always known this. That's why big institutional investors like Yale's endowment fund allocate heavily to alternative investments. And indeed, in the fiscal year of 2021, the Yale endowment—allocated largely to venture capital, private equity, real estate, and other alternatives—returned a staggering 40.2%

The idea that a diversified portfolio of alternatives could potentially do a better job of providing the modern investor with outsized returns while shielding them from losses in the market isn't just a hypothetical anymore. Hedonova, a diversified fund of alternative investments, has outperformed the S&P 500 by leaps and bounds in the first half of 2022.

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Source: hedonova.io

Invest in 12+ alternative assets in one simple fund with Hedonova

So what if everyday investors could replicate the success these large institutional investors have seen when it comes to minimizing risk and maximizing returns? What if investors could put their money in "alternative mutual funds" that pair the ease and accessibility of mutual funds with the diversification and performance of hedge funds?

That's what Hedonova aims to offer.

There are platforms out there that let you invest in just about anything now, from startups to fine art and wine to commercial real estate. However, to build a truly diversified portfolio that includes many alternative investments, you'd need to open accounts with dozens of different platforms across various asset classes. This would require a substantial initial investment, as some of these platforms have investment minimums of $10,000. It would also mean tracking your investments across all these different platforms and regularly rebalancing to make sure your holdings stay aligned with your investment objectives.

Hedonova bundles all these platforms into one fund, letting you invest in a long list of asset classes all in one place. It's diversified across 12+ alternative assets, including startups, cryptocurrency, real estate, private debt, agronomy, art, NFTs, collectibles, and wine. The alt fund is also uncorrelated to the S&P 500—the two have a correlation coefficient of just 0.13, which is considered extremely low.

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Source: hedonova.io

Trying to branch into most alternative investments—say, private equity, real estate investing, or venture capital—usually requires extensive knowledge and an initial investment of at least five figures. With Hedonova, you can let their investment managers take care of things like finding investment opportunities and managing risk, and your minimum to invest is just $5,000. When it comes to portfolio diversification beyond stocks, bonds and cash, it doesn't get much easier than this.

Apart from offering a simple investment solution, Hedonova may also offer competitive risk-adjusted returns. The fund has produced a net return of 38.7% IRR and a 33.8%

CAGR since its inception. If we're comparing it to traditional portfolios, Hedonova's fund has also produced a 15.4% Alpha over the S&P 500 during this same period.

Hedonova is open to all accredited investors. Unlike many alternative mutual funds and hedge funds, it charges fairly low fees. Fund investors pay a 1% annual management fee and a 10% performance fee. And while this fund isn't publicly traded, you can request to exit your investments at any time, and Hedonova will process a full withdrawal of your funds within 30 days.

All you need to do to get started with Hedonova is fill out a contact form on their website. From there, an investment specialist will reach out to you to explain their investment strategy and answer your questions.

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