For decades, the traditional “60/40” portfolio (60/40 split of equities and fixed income) was considered the standard foundation for long-term investing. While this approach has served many investors well over time, today’s market environment is prompting some investors and advisors to reconsider whether relying solely on public markets still provides the level of diversification they are seeking, or if they should consider a more modern approach.
Persistent inflation concerns, elevated interest rates, ongoing geopolitical tensions, and periods of heightened market volatility have all contributed to an investment landscape that feels increasingly complex. In recent years alone, investors have navigated banking instability, sharp market corrections, global supply chain disruptions, and geopolitical conflict affecting commodity and energy markets.
Against this backdrop, many investors are asking an important question:
Could a more modern approach to diversification help create a more resilient portfolio experience over time?
At Raintree Financial Solutions, this question helped shape the development of our Core + Explore™ investment philosophy more than a decade ago.
What Is Core + Explore™?
Core + Explore™ is an investment philosophy designed to blend traditional portfolio strategies with access to alternative investments in an effort to create broader diversification opportunities.
We developed this philosophy 10 years ago, and we continue to apply this philosophy when appropriate for eligible clients.
The philosophy is built around two complementary components:
Core
The “Core” portion of a portfolio represents traditional investments that are typically more liquid, market-oriented, and conservative in nature. This may include public equities, fixed income securities, ETFs, mutual funds, and professionally managed portfolio solutions.
Many investors choose to work with a Registered Portfolio Manager whose investment approach aligns with their financial goals, risk tolerance, and long-term objectives.
While many clients choose to work with Raintree Wealth Management for this portion of their portfolio, investors may also work with other portfolio management providers alongside their Raintree Financial Solutions Private Wealth Advisor.
Explore
The “Explore” component focuses on alternative investments offered through Raintree Financial Solutions in its capacity as an Exempt Market Dealer.
These investments may include opportunities in sectors such as private equity, private debt, real estate, infrastructure, and other exempt market investments.
Alternative investments often carry different risk, liquidity, and return characteristics than traditional public market securities. In some cases, they may provide diversification benefits because their performance may not always move in lockstep with public markets. However, these investments also involve higher risk and may not be suitable for all investors.
Why Diversification Looks Different Today
Historically, investors often relied on the idea that stocks and bonds would behave differently during periods of market stress. However, recent years have demonstrated that different asset classes can sometimes experience volatility at the same time.
As a result, some investors have become increasingly interested in portfolio strategies that extend beyond only public market exposure.
This is one of the core ideas behind a modern approach to diversification using the Core + Explore™ philosophy: recognizing that different types of investments may perform differently across varying market cycles.
There have been periods over the past decade where traditional public markets have led portfolio performance. There have also been periods where alternative investments have demonstrated resilience or differentiated return profiles relative to broader market conditions.
With that being said, like all investments, it is important to note that alternative investments have risks, and may also experience volatility and/or loss of capital.
The objective is not to predict which asset class will outperform next. Rather, it is about building a portfolio experience that incorporates multiple sources of potential return and diversification to try to smooth out performance across many market cycles.
A More Holistic Portfolio Perspective
At its heart, Core + Explore™ is about creating an asset mix that is right for each client.
Traditional investments can provide liquidity, transparency, and long-term participation in public markets. Alternative investments may offer access to opportunities and sectors not typically available through traditional investment channels.
Together, these approaches may complement one another within a broader investment strategy.
At Raintree, we are proud of the philosophy we have built and refined over the last decade. We believe that thoughtfully combining traditional and alternative investments can help some investors pursue enhanced diversification and a more holistic portfolio experience; particularly during periods of economic uncertainty and market volatility.
Important Considerations
Alternative investments are not suitable for every investor. They often involve higher risk, limited liquidity, valuation complexity, and longer investment horizons. Investors should carefully review offering documents and consult with qualified financial professionals to determine whether any investment strategy aligns with their personal financial circumstances and objectives.
Past performance is not indicative of future results, and diversification does not guarantee profit or protect against loss.
To learn more about the Core + Explore™ philosophy and our refined approach to diversification, visit Raintree Financial Solutions or speak with a qualified Advisor.