In this era of increased focus on private market exposure for private wealth clients, AlphaCore Wealth Advisory, a La Jolla, Calif.-based RIA, has been a leader for some time, with $8.6 billion in AUM. The firm has placed alternative investments at the core of its investment strategy, rather than treating them as a complement to traditional asset classes. At AlphaCore, many clients’ allocation to options falls in the 20% to 25% range, according to David Stubbs, chief investment strategist. Single-digit allocation is commonly found among its counterparts.
AlphaCore was launched in 2015 by alternative investing expert Dick Pfister. last year, The firm purchased Rockville, MD-based SPC Financial.Which specializes in integrating tax and estate planning into portfolio management. David Stubbs joined AlphaCore in 2025 after working as Head of Investment Strategy at Blackstone Private Wealth.
money management spoke to Stubbs about Alphacore’s underlying investment thesis, its belief in the value of international allocation, and the benefits and limitations of direct indexing.
This Q&A has been edited for length, style, and clarity.
Wealth Management: Can you describe your firm’s typical client?
David Stubbs: We don’t really have a specific client, everything is customized, but we work with ultra-high-net-worth entrepreneurs and families.
WM: What are some guiding principles when it comes to your investing philosophy?
ds: I think what defines our investment philosophy is to put private markets and alternatives at the center of most portfolios – private equity, private real estate, private infrastructure, the use of some other liquid alternatives. Around that, we hold more traditional assets–long-only equities, long-only bonds. We believe that portfolios built this way will be more resilient to tough times, will see shallower troughs, and will allow us to win more while losing less.
Our philosophy is to exercise good care in asset allocation across all asset classes, alternatives as well as liquid markets, to help clients achieve their goals.
WM: Can you tell me what your allocation might be across the asset classes you just mentioned?
ds: First, I want to emphasize that customers need to be comfortable with this approach. We have some client portfolios that contain only traditional assets. But if it were up to us, our recommendation for clients with around $5 million, we would talk about 20% to 25% in private markets or options. This increases to about 30% when you reach $10 million. There may be a higher rate for larger customers if appropriate.
WM: Do you allocate to international equities? why or why not?
ds: We allocate internationally not only to equities, but also to bonds and private markets and options. We believe there are significant opportunities internationally and we encourage clients to take that path. Again, we have many clients who prefer to remain invested only in domestic securities and companies. But our standard recommendation would be to include some allocation internationally.
In our equity allocation, we do not deviate much from the benchmark in country allocation factor or industry allocation. So, if you look at the MSCI World Developed benchmark, about 30% of that is international. If you look at the MSCI All-Country World, about 35% of it is international. We use this as a benchmark to keep in mind.
Now, when most customers join us, their value is much lower than that. Investors in every country in the world exhibit home bias. Most of their investments are related to their home country. So, it’s usually a conversation about gradually increasing international exposure for clients. We will have many options for clients in both public markets and private markets, and it may make sense for us to increase allocations internationally in private and alternative spaces rather than public spaces, depending on the opportunities we see at any one time.
WM: How often do you review your allocations and make any changes to them?
ds: I want to clarify that we maintain a set of public and private, international multi-asset models. And there are also three models in recognition status, and this obviously changes the product mix.
Most customer assets are not managed strictly on one model due to customization. Less than 20% of our assets are managed entirely on one model. Now, how often do we review models? We have a quarterly process where we check asset allocation and different components depending on the product. We may change those things within the quarter if there are significant developments in product positioning – maybe a product is discontinued, maybe a product changes in some way – but we work with a clear quarterly cadence of updating and rebalancing our models.
WM: What was your latest quarterly guidance? What kind of changes did you make?
ds: We haven’t made too many changes. Our overall asset allocation is quite stable. Due to recent events we are clearly reviewing our private markets exposure. We strongly believe that private markets are important for investment, but depending on whether some products are closed or prorated, we have to be mindful that we cannot put new money there.
I would say that we have continued to lean towards areas like private infrastructure compared to a few years ago. But in general, we are long-term investors, and we don’t make too many changes on a quarterly basis.
WM: How do you determine which asset manager to work with and which fund to invest in?
ds: We do all our hard work at home. To do this we have a research team of eight people. We obviously want to look at the companies’ risk management and track record. We have limits around their size because we don’t want to be too big a part of the fund’s asset base, so we have to take into account what allocation we are likely to make relative to the size of the fund.
We keep in mind that we do not want to have too many assets with one GP. If we have two or three funds with a certain asset manager, we probably won’t add more because we want to diversify across all managers.
We build good relationships with property managers, and we are sometimes able to negotiate preferred terms for our clients. So, if there’s a way to potentially build a custom vehicle for us, perhaps at a slightly lower fee, we might consider that as well.
WM: Do you have any allocation to digital assets, directly or through ETFs? What are your views on that asset class?
ds: No, we don’t. We can facilitate investments in these assets on an inquiry basis, and we have done due diligence on certain products that we are comfortable with, should clients ask for them. But at the moment, they are not part of our standard allocation. Obviously, some of these asset classes have a short track record. There have been significant changes in the correlation between options in that asset class and other traditional asset classes, making it challenging to understand how they will react in certain environments.
WM: Do you use direct indexing?
ds: We use some direct indexing. We have used other tax-loss harvesting measures, including long-short measures. We use them really sparingly, with a real focus on client education about what they’re investing in, measuring the impact on overall portfolio volatility, depending on how the tracking error might change. And we are careful to minimize growth risk.
WM: Do you have any cash?
ds: If you defined cash as short-term fixed income with very low credit risk, then we have some risk in both conservative and income portfolios. I think that in this world, where interest rates have normalized after the zero-interest world of the 2010s, cash is a legitimate asset class. This is clearly the ultimate liquid asset. So certainly, on the conservative and income side, using cash as an asset makes sense. For the growth portfolio, do we have some cash? No, we will not do that.
But then, if the situation changes, and you will have a significant real rate of return, can we resort to a little cash? Of course, we could. It is completely legitimate to think of cash as an asset class in this era.