Is your portfolio prepared for a recession?

Inflation is a hot-button topic even outside the world of financial advising, and decreased spending has many economists worried that a recession is drawing near. Sudden and frequent market fluctuations make portfolio diversification more important than ever.

But with traditional stocks and bonds tied so closely to an economy that’s becoming more and more unpredictable, one of the best ways to protect your portfolio is by investing in assets that often retain value despite the rest of the market’s volatility. And although alternative investing has gained mainstream attention in recent years, many of these assets are tried-and-true investments that have been part of portfolios for decades.

If you’re looking for another way to diversify before the next economic downturn, consider adding these assets to your portfolio.

Real Estate

Real estate is one of the most common alternative investment classes, and for good reason. During a recession, people often cut back on the nice-to-haves and spend strictly on essentials – but people will always need housing. So even in the worst of times, money continues to flow into real estate, and portfolios can continue to grow.

Historically, real estate has also had low correlation to stocks. This means that even when the market is especially volatile, your real estate investments won’t be directly affected. Low correlation is a key piece of diversification; if one of your investments takes a hit, it’s essential that you have other assets that won’t do the same. Especially in unpredictable times, real estate investments are one piece of your portfolio you can continue to count on.


Even before the COVID-19 pandemic, technology proved to be an essential piece of keeping the world moving in times of crisis. Similar to real estate, technology is often considered essential. Both individuals and businesses will continue to spend on tech and software even when budgets are tighter than usual, and those investments won’t fluctuate as much as traditional stocks.

But the importance of technology is nothing compared to healthcare, which is why healthtech and biotech tend to perform especially well during an economic downturn. Technology has led to great advances in the medical world, and hospitals and other facilities continue to invest in technology that will allow them to provide the best possible care to patients. In turn, there are always new healthcare technologies looking for investors. Despite how the rest of the market reacts to a looming recession, technology tends to keep portfolios diversified enough to make it through to the other side.

Private Equity/Venture Capital

Although venture capital and private equity are larger umbrellas that include a variety of different investments, they are often some of the best assets to invest in during a recession. This is because they’re considered illiquid investments; as in, they aren’t easily traded or sold. While there’s some correlation to the public market, illiquidity causes investments to be much less volatile, making them strong and reliable diversifiers.

Both private equity and venture capital are long-term investments by nature, so they often generate more significant returns over time than liquid investments would. Investors aren’t able to sell at the first sign of an economic downturn, so their value isn’t a reflection of short-term or sudden circumstances. As a result, private equity and venture capital often outperform the public market during recessions, mitigating the risk of overall loss.


The public market has never been predictable in the sense that investors know what exactly will produce the best returns; however, one thing remains consistent: things change quickly. In order to prevent sudden and significant loss, any financial advisor will recommend keeping a diversified portfolio. The idea of diversification is as old as investing itself, but the classes in which one can invest continues to grow every day.

Many choose alternative investing to put their money behind the businesses and causes they care about, but the diversification can also protect investors from significant losses. As you prepare your portfolio for the next wave of market uncertainties, consider dedicating a portion of funds to alternative investments. For more information or to get started with alternative investing, visit