The New Portfolio Model: Why Alternatives (and Venture) Belong in Every Investor’s Toolkit
For decades, individual investors relied on the classic 60/40 portfolio — 60% equities and 40% bonds — as the gold standard for diversification. But today’s market realities are reshaping what a “balanced portfolio” should look like. Rising volatility, low bond yields, and new opportunities in private markets mean investors are increasingly looking beyond 60/40 to a model that includes alternatives.
Many institutions — from pensions to university endowments — have already made this shift. And individual investors now have the tools to do the same.
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Why the 60/40 Model is Outdated
The original 60/40 model assumed that stocks and bonds would balance each other out — when one fell, the other rose. But in recent years, equities and bonds have increasingly moved in tandem, leaving investors exposed during downturns. A strategy built only on public markets simply doesn’t provide enough diversification.
That’s why many professional investors are adopting something closer to a 50/30/20 model — 50% equities, 30% bonds, and 20% alternatives.
The Shift: Value Creation Has Moved to Private Markets
Public markets used to be where most of the value creation happened — investors could buy into innovative, fast-growing companies once they went public and still capture substantial upside. But today, that dynamic has flipped.
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Fewer Public Companies:
The number of publicly listed companies in the U.S. has fallen by roughly half since the late 1990s. At the same time, the number of private, venture-backed companies valued over $1 billion has surged. - Home
Concentrated Public Markets:
A smaller set of mega-cap companies now dominate public indices. The top 10 names in the S&P 500 account for more than one-third of the index’s total market capitalization — meaning investors in traditional equity portfolios are increasingly concentrated in fewer names and sectors. - Home
Delayed IPOs and Longer Private Growth:
Companies are staying private much longer than in past decades. Where a typical tech firm might have gone public after 5–6 years in the early 2000s, today that number is closer to 10–12 years. The result? Much of the growth — and value creation — happens before IPO, benefiting private investors rather than public shareholders. - Home
Valuation Growth in Private Rounds:
As companies remain private through multiple funding rounds, valuations can grow exponentially before ever hitting the public markets. The return potential that once existed in newly listed stocks has shifted upstream, accruing instead to venture and private equity investors who gain early exposure.
In short, the innovation economy now lives in private markets — where the next generation of category-defining companies are being built, scaled, and valued long before the public ever gets access. For investors, that makes venture capital not just an alternative — but an essential part of a modern, diversified portfolio.
What Institutions Already Know
Look at the playbook of large endowments. According to the 2024 NACUBO–TIAA Study of Endowments, the average endowment now allocates roughly 45% of its portfolio to alternative strategies, including private equity and venture capital.
The message is clear:
Larger, more sophisticated institutions consistently invest more in alternatives — and outperform smaller peers because of it.
Even Yale, long considered the pioneer of this approach, has had over half of its portfolio in private markets. As of 2024, Yale’s endowment held more than $20 billion in private equity and venture capital, underscoring the staying power of this strategy.
Why Venture Capital Matters
As I’ve said before, “never put all your eggs in one basket” applies just as much to your portfolio as it does to life. Diversification doesn’t stop at stocks and bonds. Venture capital offers a complementary asset class — one that can behave differently from public markets, often with low or even negative correlation at times.
Historically, venture has delivered strong long-term returns. But the keys are access, diversification, and continued commitment:
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This is why endowments consistently lean so heavily into venture — and why we believe individual investors should consider this as well.
How Individual Investors Can Participate
Until recently, elite private market opportunities were locked away for institutions and ultra-wealthy families. That’s where Alumni Ventures comes in. We’ve built one of the largest venture platforms in the country, specifically for individual accredited investors.
The AV Syndicate is a great way for any accredited investor to get to know our firm, and our deal flow. It’s free to sign up.
Through the AV Syndicate, you can:
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See elite, otherwise unavailable, venture deal flow.
Review deals AV is already investing in, being led by a16z, Khosla, Accel, Sequoia and other top-tier VCs. - Home
Learn as you go.
We provide you with deal memos, diligence docs, and live discussions to help you evaluate opportunities. - Home
Invest deal by deal.
When you like a deal, optionally invest at a $10K minimum.
For those new to venture, it’s like enrolling in the best university for VC — complete with professors, case studies, and real-world practice. For experienced investors, it’s a way to access steady, high-quality deal flow without having to build your own sourcing engine.
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The Takeaway
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60/40 is outdated.
Stocks and bonds alone don’t provide enough diversification. - Home
More value is being created in private markets.
Companies are staying private longer, with much of their growth and valuation appreciation happening before IPO — benefiting venture and private investors rather than the public markets - Home
Institutions are ahead.
Endowments, pensions, and sovereign wealth funds allocate 20–40%+ to alternatives, with venture often at the center. - Home
Venture capital matters.
It’s a proven diversifier with strong long-term return potential. - Home
Now it’s accessible.
Through the AV Syndicate, individual investors can finally participate in the same kinds of opportunities that institutions have relied on for decades.
Join Us (For Free)
Start Investing With the AV Syndicate Today.
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Easy Sign-Up
Enroll in < 3 minutes. - Home
High-Quality Deals
Typically unavailable to individual investors. - Home
Co-Invest With Elite VCs
AV co-investors include VCs like Andreessen Horowitz, Sequoia, Khosla, Accel, and more. - Home
Exclusive Deal Information
Diligence materials, investor decks, company financials all provided. NDA required & enforced.
Nothing in this communication is an offer to sell, or a solicitation of an offer to purchase, any security. Such offers are made only to eligible investors pursuant to formal offering documents, which describe the risks (which are significant), terms, and other important information that must be considered before investing. Nothing in this communication is personalized advice to any recipient; you are strongly encouraged to consult your professional advisors before any financial decision.
Venture capital investing involves substantial risk, including risk of loss of all capital invested. Diversification cannot provide guaranteed protection against loss in a declining market; is a strategy to mitigate investment risk. Example co-investors are provided for illustrative purposes only, do not represent all organizations with which Alumni Ventures has co-invested, and do not necessary reflect future co-investors. The identity of a co-investor is not a guarantee of investment quality or performance.