The Alt-Allocation Framework

How much should you allocate to alternatives? The answer depends on your unique situation, but this framework provides a starting point based on how institutional investors and family offices approach the question.

The Sovereign Stack Model

Our framework organizes alternatives into four pillars, each serving a distinct purpose in your portfolio:

• Tangible Defense: Precious metals, strategic metals, and collectibles that hedge against inflation and systemic risk.
• Global Liquidity: International banking, currency diversification, and geographic optionality.
• Yield & Growth: Real estate, private credit, and income-generating alternatives that enhance returns.
• Structure & Strategy: Tax-advantaged accounts, entity structures, and professional advisory that maximize after-tax returns.

Allocation by Risk Profile

Total alternative allocation ranges from 20-50% depending on risk tolerance:

Implementation Principles

1. Start with Structure: Before investing in specific assets, ensure you have the right account structure (SDIRA, taxable, etc.) to maximize after-tax returns.
2. Layer In Gradually: Don't move 40% of your portfolio into alternatives overnight. Build positions over 12-24 months to average in and maintain liquidity.
3. Maintain a Liquidity Buffer: Keep at least 20-30% in liquid assets. Many alternatives have 5-7 year lockups.
4. Diversify Within Categories: Don't put all your "Yield & Growth" allocation into a single syndication. Spread across multiple deals and managers.
5. Rebalance Annually: Review your allocation yearly and rebalance if any category drifts more than 5% from target.