Crypto, Gold and More: Evaluating the World Beyond the Core

**Christine Kashkari** (0:07)
Crypto, gold, these days, nearly every investor has an opinion on them, and nearly every commentator has an angle. But true clarity on whether these and other investments beyond traditional stocks and bonds belong in your portfolio is harder to come by.
The answer, it turns out, depends on who's asking. Welcome to season two of Better Vantage by Vanguard, a podcast series hosted by custom content from WSJ and Vanguard. I'm your host, Christine Kashkari, Editorial Director at WSJ Custom Programming, and with me is my co-host in this series, in our resident expert, Joe Davis, Global Chief Economist at Vanguard. Joe?

**Joe Davis** (0:46)
Great to be back, Christine.

**Christine Kashkari** (0:48)
Today, we are joined by Roger Aliaga-Díaz, Global Head of Portfolio Construction and Chief Economist for the Americas at Vanguard, and Del Stafford, Vanguard's Head of Advice and Wealth Solutions. Together, they're going to help us cut through the noise around non-traditional exposures.
Roger, Del, thanks for being here.

**Roger Aliaga-Díaz** (1:07)
Good to be here. Thanks for having us.

**Del Stafford** (1:08)
Thanks. Excited to join the conversation.

**Joe Davis** (1:10)
If you're at Vanguard, if you're in the industry, if you're looking for someone to say, you know what, how do I think about some of these investments? What's the role in the portfolio? What are the assumptions I need to make? Where are the risks I'm trying to mitigate? These are two individuals that I would look towards to give me perspective and thinking. I'm really excited today. Today is about, I think, dispelling some myths, some misperceptions, also some of the hype around some of these investments.

**Christine Kashkari** (1:31)
Yeah, I'm just looking forward to sitting back and watching you all duke it out.
But, you know, when we talk about alternative investments, this isn't exactly new territory for Vanguard, though not many people may be aware of that. But I think the reason that we're talking about it now is because of their potential inclusion in retirement plans and the fact that the way that you can access some of these assets is evolving. So how is your approach evolving with these developments?

**Roger Aliaga-Díaz** (2:01)
It's true that we've been talking about alternatives in the sense of, for example, things like private assets. There are other income generating assets that are not necessarily following the more traditional bucket, if you will, of stocks and bonds, right? That definitely have a place in a portfolio, especially in a goals-based portfolio, where it's retirement, call-in, saving, right? And then there is other set of alternative assets that are more being talked nowadays, right? That perhaps we've been looking and thinking about it over the years at Vanguard, but we haven't made them available as part of the portfolio, right? So, very excited to discuss that. To me, one thing I like to think about in thinking about these assets is whether they are income generating or not. Because, I mean, this labels alternatives, the core, non-core, they are a little bit fluid.
And to me, the big set of assets or categories of assets are assets that create income. Investors cannot receive a cash flow, stocks, bonds, but it could be direct holdings, could be real estate. And then you have these assets that are non-income generating, assets that you can hold, like, for example, commodities, or could be maybe art collections, right? Some of the assets could be very important for the economy, right? Like metals and other important commodities. But the thing there is that the value is determined by supply and demand. They don't create an income.
So now how you think about those in the portfolio is like, are they going to create wealth for me because the price in the future will be higher than what it is today. What's your view, Del?

**Del Stafford** (3:39)
So when we think about alternatives, just simply, you know, the S&P 500 has a market cap of 60, 70 trillion.
You compare that, gold has a market cap of call it 15 trillion. That's actually larger than the FTSE 100, right? Which is the UK stock market. And so when something gets that large, then it becomes a question of how are they too big to ignore and are they more accessible now than they were previously. Over time, you would expect that something that is non-core today may actually be considered core theoretically in the future. And that could happen just purely due to accessibility. We think of what ETFs have done in the industry to bring transparency and to bring assets that don't trade very frequently to exposing them now. The same is happening in private market space now. So with the advent of Evergreen funds, I think 2025, at the end of 2025, Evergreen funds represent about $500 billion. That number was $250 billion maybe five years ago. So now they're more accessible.