Kirk Chisholm challenges the conventional rule limiting alternatives to 5-10% of portfolios, arguing it's outdated. Regulators were shocked when his firm held 40-50% in alternatives. He points to Enron, WorldCom, and AIG as proof that publicly traded companies can be far riskier than alternatives.
if we look at traditional risk portfolio management metrics, what typically you would see is you should have 5 or 10% in alternatives because they're really risky. But are they risky? So we've had conversations with regulators in the past because they said, how much of your assets are in alternatives? This is like, I don't know, 10 years ago. And I was like, I don't know, like 40, 50%. And you could have heard a pin drop. Like their mouth was on the floor. They couldn't believe we had that much. Oh my God, isn't that risky? They said, define risk for me. Is Enron risky? Is WorldCom risky? Is AIG risky? Are all these companies risky? Yeah, they were extremely risky and they were publicly traded.
