ARIA use building block funds rather than buying specific equities, which they claim reduces costs for all portfolio sizes (brokerage fees). However, costs of underlying funds may still be significant compared to alternatives.
ARIA Capital Management’s claims, as part of its core philosophy in absolute return investing, to utilise alternative investments such as hedge funds and structured products in portfolios.
ARIA has its own funds which it uses as part of the ‘building blocks’ strategy of which some are alternative products including commodities or structured products and some are more traditional.
Regarding ARIA’s belief in alternative investments it is stated, “We seek to find investments which are not solely reliant on stock markets going up in order to generate positive returns”.
This translates as follows; ARIA believe that they can analyse and understand which geographies and asset classes are undervalued and that they can make alternative investments e.g. not linked to the standard S&P 500 or FTSE 100.
A wealth of evidence over the years suggests that outperforming the combined wisdom of even the secondary markets in less commonly traded assets is highly unlikely.
Other risks in alternative investments are also left unaddressed in the company’s literature - however the ‘safer’ investment portfolios do include ETFs (Exchange-Traded Funds) which can be low cost and generate the best returns in the long run if managed correctly.
In this, ARIA claims to subscribe to Modern Portfolio Theory (MPT) which seeks diversification across asset classes within a fund.