The biggest problem is what can you expect for returns. Every deal is different. The great deals are not scalable and thus limited to how many can own them. The largest clients get first choice. You get the lesser performing deals. Most of my career was determining what valuations should be. I have no clue how to value these. Financial firms role out new products every year. This is their way to show they can beat the S&P. For 70 years most new products have underperformed the S&P.

Almost no alternative investment has a 15 year track record. Their expected return is an educated guess. They are not liquid investments that you can see the daily value based on trades. What you see is what the financial firm says the product is worth. They are the market maker. I was in the energy market during the Enron days. They set the market in long term energy products. They blew up.

Commissions can be very high. 2% fee and 20% of profits are common. Jim Simon’s fantastic performance commanded a 40% commission. Warren Buffet bet the hedge funds they could not beat the S&P after commissions in 2008. He won. It is almost impossible to beat the S&P with 2 and 20 commissions. The only person that wins is the financial firm.

Liquidity is a serious problem. You tie your funds up for years and can have a hard time getting access to funds on demand. You also have to meat wealth requirements to invest in them.

What is an investor to do to have higher returns? The easiest way is to own the S&P. This will increase the portfolio performance of most investors 5% per year. You can almost double the S&P performance if you add 20% TQQQ to your portfolio and rebalance annually.

Stars over the past 16 months has outperformed the average performance of Berkshire Hathaway, Blackrock, and Blackstone by 42 percentage points.