Evaluating and Allocating to Alternatives

Franklin Templeton’s Tony Davidow sits down with Jackie Klaber, Head of Alternative Investments at Rockefeller Capital Management, to discuss approaches to allocating to alternatives, and ways to better understand the role alternatives play in a portfolio.

In the latest episode of the Alternative Allocations podcast, I had the pleasure of interviewing Jackie Klaber, Head of Alternative Investments at Rockefeller Capital Management. We explored the process for evaluating and allocating to alternative investments, discussing a range of issues including advisor adoption, product evolution, due diligence, and the need to demystify alternatives with investors.

The industry often uses jargon that is confusing to investors, pushing clients away from the types of investments they should be embracing. Jackie shared Rockefeller’s approach to simplifying the conversation about alternatives.

“There’s so much jargon out there. A lot of complexity, perceived complexity. We really try to unpack the strategies and make it very transparent on a fundamental basis. What are our clients going to be owning? What can they expect in terms of their portfolio? How much volatility or fluctuation in monthly values? How much enhanced return potential? What is this going to look like both at the individual strategy level and then at the portfolio level where it really matters, where everything comes together?”

Similar to our approach at Franklin Templeton, Jackie suggested advisors focus on the role each investment plays in client portfolios, and how they may help in achieving specific goals. “There are two main buckets that we tend to use when categorizing our offerings. One is equity upside opportunities, capital appreciation opportunities, and the second is volatility dampening or absolute return-oriented strategies. We apply those two categories across every offering, and you could think about those two buckets as aligning to the traditional 60/40 model, so really boiling it down to those basics.”

We distill this into the following framework which focuses on the four primary roles of investments—growth, income, defense, and inflation hedging.

The Role of Various Asset Classes