Customer Reviews

The Only Guide to Alternative Investments You'll Ever Need: The Good, the Flawed, the Bad, and the Ugly (Bloomberg)

5 star:		(12)
4 star:		(4)
3 star:		(1)
2 star:		(0)
1 star:		(0)

 

 

With the stock market in turmoil, investors are looking for alternatives. Larry Swedroe's latest book with Jared Kizer suggests some alternatives that probably belong in our portfolios regardless of what the market decides to do.

Larry Swedroe and Jared Kizer examine twenty different alternative investments, and arrive at six that may be keepers for your portfolio. They also point out those that should be avoided like the flu, regardless of how exciting the sales pitch is. Professionally and personally, I've always found that advice on what to avoid can often be more valuable than advice on what to buy.

Swedroe and Kizer note the roles that real estate, TIPS, commodities, international stocks, fixed annuities, and stable-value funds can successfully play in our portfolios. If we buy them, they should be for the right reasons as performance-chasing occurs across all asset classes.

Current market conditions make this book very timely as it does a great job of explaining how you can implement alternative investments into your portfolio now and in the future.

I found this book to be sometimes poorly researched in the sense that the research is often incomplete. Some chapters are excellent and are fully worthy of five stars and others are poor and only worthy of two stars. The recent unprecedented (or at least unprecedented for the last 80 years) market conditions compel me to write an in-depth review.

The authors start the book out by listing real estate as one of the best investments, but barely mention real estate/housing bubbles and the crashes that follow. (They devote one paragraph to real estate price declines. I can't wait for the next edition.) While I am not knowledgeable on all the alternative investments listed, such as the chapter on "Private Equity (Venture Capital)," those investments I am knowledgeable about I found often to be incompletely or superficially covered or even misleading to a lesser or greater degree. I consider this book to be just another investment resource that has to be critically examined and should only be used as a starting point for one's research or investment strategy.

None the less the book is valuable as it covers twenty asset classes and explains which asset classes are flawed or dangerous and why. Six good asset classes are covered, along with eight flawed, three bad and three ugly classes. The six good classes are: real estate, inflation protected securities, commodities, international equities, fixed annuities and finally stable-value funds. The eight flawed classes are: high yield (junk) bonds, private equity (venture capital), covered calls, socially responsible mutual funds, precious metal equities, preferred stocks and convertible bonds and finally emerging market bonds. The bad consist of hedge funds, leveraged buyouts and variable annuities. The ugly are: equity-indexed annuities, structured investment products and finally leveraged funds.

This book will be most useful in helping the beginning or intermediate investor avoid the pain of investing in dangerous asset classes. Except for the long chapter on hedge funds which is excellent it is not so useful to the advanced investor who is looking for an in-depth understanding of each asset class. However, inexperienced investors with lots of money will most benefit from this book as they will be forewarned of the dangers of many tempting investments.

The book focuses on the asset classes, the historical correlations between asset classes and the need for asset allocation in one's portfolio. The authors base their conclusions on how the asset class behaves as a whole as if it were an index and how the asset classes are correlated to other asset classes. In most cases it is assumed the investor will buy into a fund not individual commodities or equities.

These correlations are somewhat suspect in my humble opinion. These past correlations don't always hold and the correlations depend on what time period one examines and how far back one goes, such as twenty-five years or fifty years or one hundred years and whether the periods examined included recessions, depressions or bubbles. During panics (such as during the last quarter of 2008) all asset classes tend to go down together and correlations go towards negative one and the historical negative correlations between different asset classes no longer hold. For example, the negative correlation historically present between the S & P GSCI (a widely cited commodity index first developed by Goldman Sachs) and stocks disappeared in the last quarter of 2008.

Very little information is given as to when an asset class is overpriced or underpriced and how to determine this. Instead they focus on the relative performance of the different asset classes. It can be misleading to say that a given investment class is good, flawed, bad or ugly. It is relative and depends on the current and future economic environment and how cheap or expensive the asset class is. For example, they are critical of covered calls in general, but make no effort to explain under what market conditions covered calls are a good investment strategy. This is like saying the stock market is always a good investment, but not distinguishing between buying stocks when the market is dangerously high such as in late 2007 versus buying low such as during March of 2009.

They discuss at length the theory behind buying collateralized commodity futures funds in that these will be negatively correlated with stocks and hence these funds "diversify the systemic risk of equity investing--the part that is not supposed to be diversifiable." I am slightly suspicious of this theory as the theory is based on historical correlations going back to only the early 1970s and doesn't take into account the rare but painful speculative bubbles in commodity prices. (I distinguish speculative bubbles from "legitimate" price shocks due to economic or political events.) I also wonder if this correlation will hold up over time if large numbers of commodity futures are solely purchased for their negative correlation with stocks as the very process of buying commodities for this purpose would tend to eliminate the negative correlation as it is ultimately a sophisticated technique to "beat the market" by getting more return for the same risk. Techniques to beat the market tend to weaken the more they are used.

At any rate this kind of portfolio management requires a degree of sophistication that will be hard for the average investor to implement based on this book as only a limited amount of theory and practical advice is given as to how much of one's portfolio should be allocated to each asset class for one's investment objectives, age and occupation. They barely mention the need to adjust one's asset allocation based on one's profession. For example, if one works in the oil industry then owning oil futures might be a real bad idea as they will perform badly about the time one is at risk for being unemployed, and a real estate broker or builder should in general be underweighted in REITs. A computer programmer would do well to not invest heavily in tech stocks as tech stocks will likely start to drop a few months before he or she is at risk for being laid off. A book that covers the topic of asset allocation in more detail is: <<Asset Allocation: Balancing Financial Risk >> by Roger C. Gibson.

Rather than buying one book that treats each asset class in one chapter one would be better off buying several in-depth books on the various different asset classes. Despite the claim that it is a comprehensive book I found it all in all to often be a superficially researched book on a multitude of topics of which only about 30-40 % are covered in sufficient detail for a serious investor. Still I give it a solid three stars as it is a good introductory book and one has to start somewhere, and for most investors the knowledge of what asset classes to avoid in general will be very helpful, but just remember portfolio asset allocation is a treacherous and complicated subject and this book only scratches the surface. It simply is not possible to adequately cover this complex topic in one medium sized book as the authors over confidently imply in their book title: <<The Only Guide to Alternative Investments You'll Ever Need>>.

SOME EXAMPLES of DIFFERENT ASSET CLASSES COVERED

REITS

They cite data from 1978 to 2007 showing that REITs (Real Estate Investment Trusts): "had the lowest correlation with the total U.S. stock market of the major equity classes, making REITS the most effective diversifier." A REIT index the authors recommend is Vanguard's REIT Index Fund that tracks the Morgan Stanley REIT Index. (They don't give the ticker, but I assume they mean the "MSCI US REIT Index," which is the new name for the old Morgan Stanley REIT Index. The name change occurred on June 20, 2005. [Note, MSCI Barra, Inc. the owner of the index is the new name for Morgan Stanley Capital International which acquired Barra in 2004 and hence became MSCI Barra, Inc.]) At any rate the ticker is VGSIX as well as VNQ for the ETF version. Now the book was published in 2008, but the high for VGSIX occurred on February 7, 2007 at $28.44 and by December 31, 2007 it had dropped to $20.45 which is just over a 28% drop. Now the SPY (an Exchange-Traded Fund) that tracks the S & P 500 was $145.21 on February 7, 2007 and on December 31, 2007 was up a bit closing at $146.21. While it is true that this is a negative correlation, but a 25% drop is hardly what the average investor would want and by March 6, 2009 the VGSIX closed at $7.01, a huge 75% drop from its February 7, 2007 high. Whereas the stock market as a whole performed better, only dropping about 55% from its high to its low. By fall of 2008 the REIT index was no longer negatively correlated with the stock market. In fact it now rises and falls with the market, but with more volatility, which is likely not what the average investor would want. (Note, the above historical prices are daily closing prices unadjusted for splits or dividends from [...])

HIGH YIELD BONDS

While this chapter is pretty good and has lots of useful theory they clearly are biased against high yield junk bonds. They state that high yield (Junk) bonds are too risky and too exposed to equity risk to: 1) serve as a liquid reserve,2) generate a stable cash flow or 3) provide a portfolio with stability. They fail to mention that some studies have shown that a diverse portfolio of high grade junk bonds, i.e., just below the lowest investment grade (e.g., BB+ using Standard & Poor's grading system) have provided the best overall return (within the universe of bond funds) as the higher interest rates offset the losses due to defaults. Also, some analysts believe junk bond funds provide a better long term return than CDs. Further, they don't take into account the impact of economic cycles in their analysis of junk bond funds. (By the way Benjamin Graham [author of <<Security Analysis>> and Warren Buffett's mentor] did not like junk bond funds as he felt that owning the stock of companies with junk bonds would ultimately perform better, provided one had a large enough portfolio of such companies.)

More seriously they don't discuss the merits of muni bonds, which are graded the same as corporate bonds, but have a much lower default rate and a much higher recovery rate when a default does occur. So called muni (government municipal) junk bonds have performed very well historically.

Muni bonds in general provide an excellent and safe source of income for someone in a high tax bracket as they are either federal or state tax exempt or both. For example, double tax exempt Puerto Rico muni bonds in general have been rated BBB+ or lower (unless they are insured or have other special features) and have historically yielded superior returns if held to maturity due to the bonds selling at somewhat of a discount compared to other more highly rated muni bonds as Puerto Rico has never defaulted on its bonds despite several economic crises over the past decades. (Whether they still are as safe is another matter as recently some of Puerto Rico's pension muni bonds have been downgraded to junk status [e.g., BB+] by some of the rating agencies.)

Some studies have shown that muni bonds have default rates that are comparable to corporate bonds that are about two or three ratings higher. So a muni bond that is rated BB+ will be about as good as a BBB or BBB+ corporate bond. It may even be better than this as defaults on muni bonds are often temporary and interest payments are quickly resumed and in the case that interest payments are not resumed the recovery rate of the principal is much higher than with corporate junk bonds.

Consider Wisconsin. General obligation Wisconsin bonds have recently been downgraded to AA-, but nobody in their right mind considers Wisconsin to have any significant default risk. So even though Wisconsin's debt rating is one of the worst in the nation compared to other states (only three states have a lower rating), on an absolute scale it is probably safer than any corporate debt in the long haul. Until recently AIG and GE were both rated AAA, but now which would you rather own: a long term AIG bond or a long term Wisconsin general obligation bond backed by the taxing power of the state of Wisconsin? (There is a reason Wisconsin is known as a tax hell.)

COVERED CALLS

The chapter on covered calls was superficial, highly misleading and contradicts advice given by option experts like Lawrence G. McMillan (author of <<Options as a Strategic Investment>>). McMillian, for example, devotes fifty-five pages to the subject whereas the authors only devote four and a half pages to the subject. (The author's analysis is based on a few select set of academic studies based on investment funds that use covered calls as an investment strategy, not on individual covered calls, whereas McMillian relies both on his mathematical background [he has a M.S. degree in applied mathematics] and the academic research on the subject as well as his years of practical experience as an options trader and investor. McMillian book is mostly focused on investing in individual stocks and options.) The authors fail to distinguish between different covered call strategies or to mention the positive advantages of being able to adjust one's position when the underlying moves strongly or the research showing slightly out of the money covered calls theoretically generate a better return than other covered call strategies. In summary, this is a very shallow treatment of a very useful investment strategy when used correctly.

Strangely they mention covered calls, but not the dangers and merits of naked put writing. Naked puts behave like covered calls, but enable one to be highly leveraged which can be extremely dangerous if over done. However if done very conservatively in conjunction with treasury bonds they can enhance one's return.


LEVERAGED FUNDS

The chapter on leveraged funds only mentions the obviously leveraged funds such as the Rydex Nova Fund (RYNVX) that explicitly tries to give 150% of the S & P. They mention the pitfall of decompounding, but don't adequately explain it. (They devote a full two confusing sentences to the topic.) Essentially it means that in periods of high volatility the fund will go down more than it will go up. Think of it this way, if the market drops 10% the 150% fund will drop 15%, but when the market recovers 10%, the market will now be 1% below where it started out (.9 * 1.1 = .99), but the 150% fund will recover only to 97.75 % of where it was (.85 * 1.15=.9775). The greater the volatility the more this decompounding will happen. However, the lower the volatility and the lower the market price for the asset class being leveraged is then the better the leveraged fund will perform and the less effect this decompounding will have. Thus the time to buy a leveraged fund is near the bottom of a bear market, assuming one can time such a thing. There are mathematical formulas that predict the expected performance of a leveraged fund as function of the leverage and the amount of market volatility. The greater the leverage the more destructive a "unit" of volatility will be, assuming a market that moves randomly. While from March 6 to April 17, 2009 a leveraged fund would have performed wonderfully, the same fund would have performed doubly bad in the fall of 2008 because of the downward market trend and because of the extreme volatility present in the market at this time.

This short chapter fails to mention that many closed end funds employ leverage and that this is an advantage during a bull market, but can be a very great disadvantage during a bear market or periods of high volatility as the funds may be forced to sell assets cheap to maintain a fixed asset coverage of 2:1 (if using AMPs) or 3:1 (if using debt) as required by the 1940 Investment Trust Act. In fact the term "Closed End Fund" is not even in the book index. Leveraged funds may be an ugly investment in general, but if they are purchased via closed end funds trading at a steep discount to net asset value (NAV) at the end of a bear market or when volatility is not too high they may be a good buy.

Unfortunately they also fail to warn the reader that brokers often push closed end funds to their clients as a source of income as they often appear to offer an attractive yield. So many investors own a potentially ugly leveraged investment without knowing it. The broker rarely informs the client that the closed end fund is leveraged. Since they frequently trade at a discount to NAV and are leveraged they yield more than their mutual fund counterpart. Worse one may not even get the discount if one buys from a brokerage that underwrites the fund. One should never buy a closed end fund from a brokerage that underwrites the fund as at time of the initial price offering (IPO) they initially trade at around a 6% premium to NAV to pay for the underwriting and broker commission costs and this 6% premium is essentially a "hidden" front end load. Again, an incomplete and quick coverage of a complex topic.

INFLATION PROTECTED BONDS

The section on inflation protected I-Bonds was too short and didn't include any historical information on the yields of I-Bonds or mention that the fixed rate portion has gradually been going down. For example, the 3.6% fixed rate available for I-Bonds purchased in 2000 is no longer available and is now less than one percent for I-Bonds purchased in 2008. Thus they may not be such a good investment in 2009 as they were in the past. Also, they mention that one can buy only $5000 a year for paper I-Bonds or electronic I-Bonds and don't clarify that the $5000 limit applies to each form of the bond so one can buy $10,000 a year total by buying $5000 of paper I-Bonds and $5000 of electronic I-Bonds.

The section on Treasury Inflation Protected Securities (TIPS) was much more in-depth and contained some genuinely helpful information on the pros and cons of investing in TIPS.

FIXED ANNUITIES

The chapter on Fixed Annuities was well written and reasonably comprehensive.

PREFERRED STOCKS

The chapter on preferred stocks did a good job of covering the risks of preferred stocks for the individual investor and why they are in general advantageous to corporate buyers, but not to the individual investor. (The dividends are taxed at a lower rate for corporations.) Again, the emphasis is on the risks, not the rewards and the treatment is general. They fail to mention under what special situations preferred stocks are advantageous to the individual investor. For example, preferred stocks in sound (e.g., not utilizing excessive leverage) AAA government backed mortgage REITS may be advantageous as they are not as prone to dividend cuts caused by temporary unfavorable interest rate spreads as the common stock is and these REITS may not be that risky if they are not excessively leveraged. Another example, some investors have made an enormous amount of money purchasing cumulative preferred stocks in companies that have temporarily suspended their preferred dividend, but still are viable companies. Eventually these companies paid all the accrued preferred dividends. Another example, a high quality preferred trading slightly above par with a high coupon rate (compared say to the ten year treasury rate) with only three to twelve months remaining before it is callable "may" be an excellent short term investment as the default risk is very low, the odds of it being called are high and the final yield (taking into account that it will likely be called at par) may be considerably higher than what other short term investments yield and if it isn't called it will still yield an excellent return because of the high coupon rate. While these special situations may be somewhat rare and require special expertise to identify and evaluate it wouldn't hurt to mention some of these situations and give some references for further research.

HEDGE FUNDS

This is longest and the best researched chapter at about thirty pages. It seems odd to me to devote so much space to a topic that will only be applicable to high net worth individuals. If one is considering investing in a hedge fund or just curious about hedge funds in general then this book is well worth buying for this chapter alone.

As an investment advisor and co-host of a financial radio program I have read a voluminous amount of investment material from a host of authors over the years. Larry is clearly one of the best financial writers I have come across. This book illuminates the reader on a myriad of investment strategies that are rarely understood by most investors and financial professionals. His writing style is entertaining, informative and supported by solid empirical evidence. Summarizing a quote from Larry Swedroe, "there is a difference between information and knowledge, information is a fact or piece of data, knowledge is information that can be put into practical use to make better decisions". This book provides the reader with practical knowledge on less understood, alternative investments. I recommend this book to all investors and I would also recommend checking out Larry's other books.

Kenneth R. Smith. CFP®, MS
CEO Empirical Wealth Management LLC

This book is so well written and educational that I read it from cover to cover in only a few days. I found the arguments for the "good" investments well supported, and the explanation for the "flawed," "bad" and "ugly" convincing and supported by facts and research. I only wish that this book was available before I bought some of the bad and ugly investments in the past. As with Swedroe's other publications, he has again provided the average investor with valuable knowledge without any hype or noise.

This book forms the third of a trilogy that began with "The Only Guide to a Winning Investment Strategy You'll Ever Need," which primarily (though not exclusively) is a treatise on intelligent mutual fund investing--particularly on the equities that drive much of the return investors hope to acquire. "The Only Guide to a Winning Bond Strategy You'll Ever Need," focuses on the fixed income component--the hopefully stable "rock" of many investors' portfolios. " This book, with Jared Kizer, completes the coursework, indeed, such as most investors will ever need.

While Swedroe touches on these "alternatives" in his two other books, this one provides a detailed treatment and understanding of the whys, why nots, and maybes of 20 popular investment considerations. As always, the info is accessibly presented, thorough, and well-supported with the latest academic research--such support being a particularly important, but often ignored requirement by some other popular investment authors and speakers.

I was surprised to find that some of the recommended alternative investments in his "Good" category are actually common asset allocations for those familiar with Swedroe's other work, though they remain fringe investments with mainstream fund managers and other uninformed folk, and are thus properly re-examined here. I suppose if one focuses on those few choices in his "Good" category and shuns the rest, all would be well. But knowing the reasoning behind each choice is valuable, especially if one wishes to save oneself, a friend, or a loved one from being snookered into a truly "Bad" investment, inevitably dressed in attractive garb.

The chapter on hedge funds is worth the price of the book, because most people I know, starting with me, imagined these investment "vehicles" to be something other than what they actually are. Swedroe demystifies these with punitive brilliance--rendering such fund managers emperors without clothes, who actually hedge nothing at all.

The Swedroe trilogy is essential for any investor, certainly for most folk, but ironically yet more needed by the many expert managers who seem to muck things up for the rest of us in our 401ks and IRAs. Arrogant as his book titles seem pertaining to our needs, if you own these three books on investing, you really can throw most of the other books away.

Arty

I really like how this book covers a lot of assets that other books don't touch or look at fairly shallow. One nice thing is the illustrative simple test portfolios to show the effects of the assets under discussion and how they can be used. Alternatively for the "Flawed", "Bad" & "Ugly" the test portfolios show how to achieve similar effects/goals with less expensive "Good" assets and eliminate most of the gigantic fee drag and many of the disadvantages in the product being replaced.

Here's the table of contents.

Introduction

Part 1. The Good
1. Real Estate
2. Commodities
3. International Equities
4. Inflation-Protected Securities
5. Fixed Annuities
6. Stable-Value Funds

Part 2. The Flawed
1. High-Yield (Junk) Bonds
2. Private Equity (Venture) Capital
3. Covered Calls
4. Socially Responsible Mutual Funds
5. Precious Metals Equities
6. Preferred Stocks
7. Convertible Bonds
8. Emerging-Market Bonds

Part 3. The Bad
1. Hedge Funds
2. Leveraged Buyouts
3. Variable Annuities

Part 4. The Ugly
1. Equity-Indexed Annuities
2. Structured Investment Products
3. Leveraged Funds[/code]

One area that is missing is Gold as an investment. Author Larry Swedroe does have an article that covers that subject.

http://www.indexuniverse.com/sections/research/5100.html?tmpl=component&print=1&page=

One issue I've noticed with this book is it appears to be out of date on products that came out after particular chapter(s) were written. In this case for PME the Market Vectors Gold Miners ETF (GDX) inception date was in May 2006. This the only PME fund that is an index with sufficient assets ($2.7 billion), trading volume and decent 0.55% ER. All the other ones in the book are actively managed funds.

Conversely there are areas where there too new a funds where none existed before. In the commodities chapter the book discusses active commodities management through commodity trading advisors. In the last 6 to 24 months several indexes and funds have appeared that cover this area. It's far too complicated to cover here, but they are expensive and have an additional 1.7% fund expenses on top of the expense ratio.

Real Estate: Covers both US and International Real Estate. Interestingly global real estate weightings are 60/40 US/International.

Inflation Protected Securities: Cover TIPS extensively with an updated and more detailed version of the shifting allocation strategy. FYI it appears Hussman Strategic Total Return (HSTRX) uses a shifting TIPS maturity combined with gold mining stock, foreign currency and occasional use of utility stocks with a pricy 0.90% ER.

International Equities: Covers everything from developed markets, emerging markets, small and value effects on diversification.

Socially Responsible Investing: There are now low cost ETFs that cover these areas. DSI, KLD.

Preferred stock: are now low cost ETFs that cover these areas. PFF, PGF and PGX.

Absolutely terrific review of the various alternative asset classes. A great complement to books like the 4 Pillars by William Bernstein.

As a writer/editor, I've long noticed that articles about those oh, so enticing alternative investments are perennial favorite reads. I suppose we're always chasing that better mousetrap even in the face of age-old wisdom: If it sounds too good to be true, it probably is. In delightful and clear detail, Larry and Jared help us understand why this wisdom remains as important today as ever, and how to use it to avoid the landmines buried under Wall Street. All you have to do is read a few headlines these days to realize what happens to those who visit the financial district unforewarned.

The Only Guide to Alternative Investments You'll Ever Need: The Good, the Flawed, the Bad, and the Ugly

"The Only Guide to Alternative Investments You Will Ever Need" lives up to its name. Investors looking to diversify beyond the traditional stock markets will find this an invaluable resource. Whether you are an investment professional, or a layman, this book will be a highly useful reference. Swedroe's style is approachable, entertaining, and non-threatening. But, he gives you all the information you need to approach asset classes that can be great additions to your portfolio. And, of course, knowing how to avoid a total disaster in your investment plan is priceless! Highly recommended for anyone interested in any of the alternative asset classes.
Frank Armstrong, CFP, AIFA
President and Founder
Investor Solutions, Inc.

First, I would say the review on this book by Stuart-Little that gave 3 stars is worth reading.
I think this book is good for the novice or the experienced investor. I consider myself an experienced investor. Nonetheless some of the chapters provided new information. Some chapters either clarified my thinking on an asset class, or firmed up my thinking which can be very helpful. Examples: Private equity and the historical evidence in which these investments do not on average do better than publically available investments. This is not intuitive or expected. I also think the chapter of Precious Metal equities explains how to make a (potentially) "flawed" investment into a profitable one. The review on Variable Annuities in the "bad" investment section is also fair in pointing out the benefit of asset protection in this vehicle.
I would have liked to see a chapter or section devoted on the subject of foreign currency. Topics that this section could discuss include foreign currency and bond mutual funds and ETFs. Also I am curious about the opportunities or lack thereof in the FOREX. Since the book lacked sufficient information on these topics, I would say that this book is not "the only guide ... you'll ever need." However it is the best book I have read or found so I think 4 stars is the right grade.
In 2008, only two asset classes did not go down, gold (gold stocks did go down), and treasury bonds/US Dollar. This book actually does not have a section on "deflation" scenarios and this is how many experienced investors were inadequately diversified in 2008. The authors could argue that T Bonds/US Dollar is not an "alternative investment" so it is not within the purview of their book. However, I think gold is an alternative investment. Neither the word "gold" or "deflation" are in the index of this book.
Re-balancing is the last point I would like to discuss, because it helps investors avoid getting damaged by bubbles. I would have liked to see a chapter on those providers/discount brokers that allow easy re-balancing of investments. In my 401K, I can do this with a click of a mouse which is particularly attractive since these transactions in a tax advantaged account are tax free. I am wondering if there are regular discount brokers that facilitate such an approach of rebalancing, though it would cause a taxable transaction and substantial paper work. This would work particularly well now that we have ETFs for so many investment possibilities.
In addition, I wonder if the authors could have included a chapter on vehicles that purport to provide the asset allocation that is favored by the authors, Examples include the Permanent Portfolio Fund, retirement targeted funds, and one or more of the PIMCO funds.
Finally, I would say that people should generally avoid investing in private equity based on the author's well researched chapter. However, sometimes concentrating a large amount of money in a narrowly focused way, is a way to wealth, perhaps the only way to extraordinary returns; then after the wealth is made, then diversify it in the way that the authors recommend in the remainder of the book.
I do not know if the authors read these reviews; it might be useful for them to comment below my review and others, especially since so much has happened in the financial markets since there very good book has been written.