TY - JOUR T1 - Practical Applications of Alternatives: <em>How? How Much? Why?</em> JF - Practical Applications SP - 1 LP - 3 DO - 10.3905/pa.2016.4.3.208 VL - 4 IS - 3 AU - Javier Estrada A2 - Saklatvala, Kathryn Y1 - 2017/01/31 UR - https://pm-research.com/content/4/3/1.10.abstract N2 - Alternatives: How? How Much? Why? Javier Estrada Investors who would like to use alternatives to diversify their portfolios still lack evidence-based guidance for allocations. Javier Estrada of IESE Business School sought to address the lack of insight in the existing literature. For his research, Estrada uses two of the most accessible alternatives—gold ETFs (for commodities) and REITs (for real estate)—to diversify model portfolios of conventional stocks and bonds under various optimization scenarios. He finds that in all cases, both gold and REITs have a place in optimal portfolios, with allocations ranging from 15% to 35%—but, in general, alternatives are better at reducing risk than at enhancing returns.“It was very interesting to see that alternatives do belong to optimal portfolios in all of these very different optimization criteria in a rather sizeable way,” he observes. ER -