2 portfolios hunting for 8%+ p.a. with minimum volatility (psst... they’re downloadable)

What does it take to construct a portfolio capable of delivering 8%+ p.a. returns, with less volatility and market correlation than equities?

That’s the challenge we put to two of Australia’s leading advisers - Alex Thompson of Viola Private Wealth and Hugh Robertson of Centaur Financial Services - both with deep experience in alternatives portfolio construction and in managing money for wealthy clients.

We asked them: If a client had plenty of capital, time on their side, and wanted smoother returns than equities alone can provide, how would you build their alternatives sleeve?

In their own words, Alex and Hugh explain how they approached the challenge, the traits they look for in alternative investments, and how they think about portfolio construction when the priority is resilience over excitement.

The full portfolios, including all holdings, target weights, and expected return and volatility forecasts, are available to download below.

But first, why consider alternatives?

Research from CoreData, in collaboration with Praemium, found that 22% of high-net-worth investors already hold alternatives, and 85% plan to increase their allocation. The top motivations include diversification (58%), access to exclusive opportunities (43%), and exposure to innovation (40%).

It’s that first factor — diversification — that really stands out. Investors have long memories, and those who lived through 2022 haven’t forgotten when the classic 60/40 portfolio broke down and delivered a negative return, raising doubts about whether bonds still provide true ballast against equity risk.

That question has sparked a quiet evolution in portfolio construction. Firms like Bell Potter and Morgan Stanley are now advocating 5–20% allocations to alternatives such as gold and private markets.

Depending on the mix, alternatives can reduce portfolio volatility, provide uncorrelated return streams, or boost the reward for risk taken. The chart below, from KKR’s 2024 report An Alternative Perspective: Past, Present and Future, backs this point up. 

Take a look at where private equity, direct lending, and infrastructure sit, for example. Each has delivered returns that are slightly above or below the S&P 500 - but with considerably less risk.

“Alternative investments are often lumped together but behave quite distinctly in terms of what they offer from a return, risk, correlation, yield, and volatility perspective,” KKR noted in the report.

Before we begin...

This exercise isn’t about providing ready-made portfolio solutions. It’s about showcasing how professional investors think when constructing an alternatives sleeve within a diversified portfolio.

These are not personal recommendations. The holdings and assumptions in the downloadable Excel sheets are based on each expert’s analysis and forward-looking estimates - which, as always, may not eventuate.

With that out of the way, let’s get to the good stuff.

Alex Thompson (Viola Private Wealth) - Alex’s Private Markets Powerhouse

When I construct portfolios, everything starts with the client - their situation, goals, and what they’re trying to achieve. Asset allocation sits at the centre of that process because it gives us a stable foundation for decision-making, grounded in long-term objectives.

The alternatives allocation needs to be considered within the broader context of the portfolio. 

Generally speaking, we advocate for up to 30% of a client’s assets to be allocated to alternatives, split between growth and defensive exposures depending on their risk tolerance and liquidity needs. 

We follow the CFA Institute’s definition: traditional assets are equities, fixed income, and cash; alternatives are everything else - private equity, hedge funds, venture capital, infrastructure, and private credit.

The overarching theme here is resilience. 

Our goal is to build all-weather portfolios that protect capital and generate revenue throughout different market cycles. 

• On the defensive end, infrastructure plays a core role because it provides access to quality, inflation-protected real assets. 
• On the growth side, we favour private equity and opportunistic funds that capture private-market alpha and deliver risk-adjusted returns less correlated with public markets.

Readers will no doubt note gold is missing from our model. We do hold ASX:QAU (Gold Bullion Currency Hedged ETF) because it’s backed by physical bullion and acts as a longer-term inflation hedge. 

However, while we don’t typically look at market timing, I do think the entry point needs to be considered carefully when an asset class has already run 40%+ in a year. 

Gold has produced similar returns only three other times since 1979, and its volatility and long drawdowns make it a less efficient risk-adjusted exposure over time. That’s why, in most cases, I prefer infrastructure in its place. 

Infrastructure is cash-flow-producing, more defensive in nature, and historically offers comparable - if not higher - total returns with less volatility. The vehicles we use are either fully liquid or semi-liquid with monthly liquidity. We always assess each client’s liquidity needs to determine how much illiquidity a portfolio can reasonably afford.

Ultimately, our focus at Viola is simple: protect capital, manage liquidity carefully, and make sure every asset earns its place in the portfolio.

📥 Download Alex’s Private Markets Powerhouse here

Hugh Robertson (Centaur Financial Services) - Hugh’s Decoupled Diversifiers

The traditional 60/40 portfolio is struggling to deliver consistent, risk-adjusted returns. Just look at 2022 when both equities and bonds fell together. 

That’s why I’ve constructed a 100% alternatives portfolio designed to lower volatility, enhance diversification, and tap into differentiated sources of return.

This portfolio blends private equity, private credit, infrastructure, venture capital, gold, and long/short strategies - each chosen for its ability to perform independently of public market cycles. 

Private credit exposure comes through MA Financial and Pengana, which provide stable income from asset-backed lending and floating-rate instruments. 

PIMCO’s Asset-Based Finance Strategy adds niche exposure to consumer and aviation finance, while Macquarie’s Private Infrastructure Fund introduces stability through energy, transport, and digital infrastructure.

To complement these, I’ve included Talaria and L1 Capital for income and downside protection, the Global X Physical Gold Structured (ASX: GOLD) for inflation hedging, and Blackbird Ventures for high-growth tech exposure.

This portfolio isn’t just diversified for the sake of it - it’s purpose-built to deliver better risk-adjusted returns, lower volatility, and multiple sources of income and growth. 

In my view, it reflects a modern approach to portfolio construction; one that’s resilient, forward-looking, and aligned with the realities of today’s investment landscape.

📥 Download Hugh’s Decoupled Diversifiers portfolio here

Editor’s Note: Two roads to 8%+

These portfolios prove there’s more than one way to go after alternative returns - and let’s be real, “alternatives” shouldn’t just mean buy gold and hope for the best.

One of the biggest frustrations I hear from readers is that gold doesn’t generate cash flow. These portfolios do and yet they’re built to smooth out the ride. In fact, both exhibit far less volatility than the S&P/ASX 200’s average of around 15%.

• Alex’s Private Markets Powerhouse leans on infrastructure, private credit, and selective private equity. It’s built for patient investors who can trade some liquidity for steadier, high-quality returns.
• Hugh’s Decoupled Diversifiers, meanwhile, goes further off the beaten path - spanning venture capital, secondaries, long/short strategies, and niche lending to capture multiple sources of alpha. It’s more dynamic, more listed, and intentionally unconstrained.

Both are targeting 8%+ annual returns, but they take very different roads to get there - and the illiquidity premium is the toll you’ll pay along the way.

A big thank you to Alex and Hugh for sharing their insights.

Over to you

If you found this exercise valuable and want to see more expert-built alternatives strategies, let us know in the comments below.

And if you’re already building your own alternatives sleeve, we’d love to hear what you’re including - gold, private credit, infrastructure, or something different?