Nomura’s Gareth Nicholson is putting a precise number on how much risk investors should shift away from traditional markets, arguing that roughly a quarter of a portfolio belongs in alternatives. His case rests on a simple idea: in a world of choppy equity indices and unpredictable central banks, investors need more than just stocks and bonds to keep returns on track. I see his 25 percent target as less of a bold bet and more of a disciplined framework for building resilience into modern portfolios.
Why Gareth Nicholson is drawing a line at 25 percent
When Gareth Nicholson talks about allocating a quarter of a portfolio to alternatives, he is not pitching a speculative side hustle, he is setting a structural benchmark for long term investors. In his view, 25 percent is large enough to matter for risk and return, but not so large that it overwhelms the core exposure to public markets. That balance is especially important for investors who rely on their portfolios for retirement income or to fund multi decade goals, where a single asset class shock can derail carefully laid plans.
In a recent interview, Nicholson, who leads investment strategy at Nomura, framed the guidance as a call to “stay disciplined” rather than chase the latest fad, urging investors to keep roughly a quarter of their holdings in a diversified mix of non traditional assets even when public markets feel calm. His argument is that a consistent allocation to alternatives can smooth the ride through different parts of the cycle, a point he underscored while discussing how to allocate 25% of portfolio in alternatives without losing sight of overall risk.
Nomura’s broader push into alternatives
Nicholson’s 25 percent marker does not exist in isolation, it sits inside a much broader strategic push by Nomura to embed alternatives at the heart of client portfolios. Earlier this year, Nomura partnered with Hubbis to stage a dedicated Alternatives Deep Dive 2025 in Oct, using the event to showcase how private markets, real assets and other non traditional strategies can anchor wealth planning. The collaboration with Hubbis, which organised the logistics, curated the agenda and hosted the day, signalled that alternatives are no longer a niche side conversation but a central plank of the firm’s advisory message.
The Forum was framed by Nomura as a chance to move beyond product pitches and focus on portfolio construction, with speakers repeatedly stressing diversification, resilience and consistent income as the key outcomes that alternatives should deliver. Across the agenda, the organisers highlighted how this “Alt” toolkit can help investors navigate inflation, policy shifts and market dislocations, positioning the Deep Dive as a practical guide to anchoring portfolios for resilience rather than a theoretical seminar.
What counts as an alternative in Nicholson’s playbook
Before investors can decide whether 25 percent in alternatives makes sense, they need clarity on what actually sits inside that bucket. In Nicholson’s framework, alternatives typically include private equity, private credit, hedge funds, infrastructure, real estate and sometimes more specialised strategies such as catastrophe bonds or secondaries. The common thread is that these assets behave differently from mainstream stocks and government bonds, often trading in private markets or using distinct return drivers like contractual income, illiquidity premia or relative value trades.
That breadth is why Nomura’s Deep Dive repeatedly referred to “Alt” as a toolkit rather than a single product, with each component playing a different role in stabilising returns. The event’s Key Takeaways emphasised that alternatives are not a monolith, and that investors should understand how private credit can provide floating rate income, how infrastructure can hedge inflation, and how certain hedge fund strategies can dampen volatility. By spelling out the distinct roles each strategy plays in stabilising returns, Nomura is effectively giving investors a menu for how to fill that 25 percent sleeve.
Resilience, not just higher returns
The most striking message from Nomura’s Alternatives Deep Dive 2025 was that this push into non traditional assets is not primarily about juicing performance. Across the panels and workshops, speakers hammered home that alternatives are first and foremost a tool for resilience, helping portfolios absorb shocks when public markets sell off. That means focusing on steady income streams, contractual cash flows and diversification benefits rather than headline grabbing return projections that may not survive the next downturn.
In practice, that philosophy translates into a preference for strategies that can keep paying investors through different parts of the cycle, such as core infrastructure, income oriented real estate or senior private credit. The organisers stressed that each alternative sleeve discussed during the Forum plays a distinct role, whether it is smoothing volatility, providing inflation linked income or offering exposure to growth themes that are hard to access in public markets. By framing alternatives as a way to build resilience and consistent income, Nomura is trying to shift the conversation away from speculation and toward risk management.
How a 25 percent allocation changes portfolio behaviour
From a portfolio construction perspective, moving a full quarter of assets into alternatives is a meaningful shift that can change how a portfolio behaves in stress scenarios. With 25 percent in strategies that are less correlated to public equities and government bonds, drawdowns during market sell offs can be shallower, and recovery paths can be smoother. That is particularly relevant for investors who remember how quickly diversified portfolios were hit during past crises when correlations between traditional assets spiked toward one.
At the same time, Nicholson’s target is not so aggressive that it abandons the benefits of liquid markets. Keeping roughly three quarters of the portfolio in listed equities, fixed income and cash preserves flexibility, while the alternative sleeve works in the background to dampen volatility and add differentiated income. The Forum Nomura framed with Hubbis explicitly highlighted diversification, resilience and consistent income as the pillars of this approach, underscoring that a 25 percent allocation is designed to complement, not replace, the traditional core of a balanced portfolio, as reflected in the way the Forum was framed around those themes.
Discipline over market timing
Nicholson’s insistence on discipline is a direct response to how many investors currently use alternatives, dipping in and out when headlines turn scary or when a particular strategy is in vogue. That kind of market timing can be especially damaging in private markets, where entry and exit points are less flexible and where returns often accrue over long holding periods. By advocating a steady 25 percent allocation, he is effectively telling investors to treat alternatives as a strategic holding, not a tactical trade to be switched on and off with every macro scare.
In his Dec appearance, Nicholson linked this discipline to a broader mindset shift, encouraging investors to build a rules based framework for how they size and rebalance their alternative exposure. Rather than waiting for volatility to spike before adding hedges or income strategies, he argued that investors should maintain a consistent allocation through the cycle, adjusting only as their risk tolerance or life goals change. His comments on the need to stay disciplined were as much about behaviour as they were about asset classes, highlighting how emotional decision making can undermine even the best designed portfolios.
Lessons from the Alternatives Deep Dive 2025
Nomura’s Alternatives Deep Dive 2025 in Oct offered a rare, concentrated look at how a major institution is operationalising this 25 percent philosophy across different client segments. The partnership with Hubbis meant the event pulled in private bankers, wealth managers and family office executives who are on the front line of advising affluent investors. Across plenary sessions and workshops, the conversation kept circling back to how to integrate alternatives into existing portfolios without overcomplicating clients’ lives or overwhelming them with jargon.
One of the most practical lessons was the emphasis on role based allocation, starting with the outcome an investor needs and then matching it to the right alternative strategy. For example, a retiree seeking stable income might tilt toward core real estate and infrastructure, while an entrepreneur with a longer horizon might lean into growth oriented private equity. The Deep Dive’s Key Takeaways made it clear that the goal is not to sell every client the same product set, but to use the “Alt” universe as a flexible toolkit that can be tailored to different risk profiles, a message that came through strongly in the Key Takeaways shared after the event.
How independent managers frame alternatives
Nomura is not alone in arguing that alternatives should be a structural part of a balanced portfolio, and independent managers are echoing similar themes. One wealth manager describes alternative investments as a cornerstone of a well rounded portfolio, highlighting how they can provide non correlated returns that behave differently from mainstream asset classes. That perspective aligns closely with Nicholson’s focus on diversification, suggesting a growing consensus that investors need more than just a mix of equities and bonds to manage modern risks.
These independent voices also stress the importance of careful selection and due diligence, warning that not all alternative strategies deliver the same diversification benefits. Some hedge funds, for example, can be highly correlated to equity markets, while certain private equity funds may concentrate risk in specific sectors or geographies. By contrast, strategies that genuinely offer non correlated returns can help investors create a balanced portfolio with alternative investments, reinforcing the idea that the quality of the 25 percent allocation matters as much as its size.
Practical steps for investors considering Nicholson’s target
For investors who find Nicholson’s 25 percent target compelling, the first step is to audit their current exposure and understand how much of their portfolio is already in alternative strategies, even if it is not labelled that way. Holdings in private real estate funds, infrastructure vehicles, hedge funds or private credit may already add up to a meaningful slice, especially for high net worth investors who have been active in these markets for years. Mapping this exposure against overall goals and risk tolerance can reveal whether the portfolio is underweight, overweight or roughly aligned with the suggested benchmark.
From there, I would focus on building a simple, role based allocation plan that spells out what each alternative sleeve is meant to do, whether it is generating income, hedging inflation, dampening volatility or capturing long term growth. That plan should also include clear guidelines for rebalancing, so that the alternative share of the portfolio stays close to the 25 percent target as markets move and as life circumstances change. By combining Nicholson’s disciplined sizing with the resilience focused philosophy showcased at Nomura’s Deep Dive and echoed by independent managers, investors can turn a headline number into a practical roadmap for navigating an uncertain market cycle.
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Grant Mercer covers market dynamics, business trends, and the economic forces driving growth across industries. His analysis connects macro movements with real-world implications for investors, entrepreneurs, and professionals. Through his work at The Daily Overview, Grant helps readers understand how markets function and where opportunities may emerge.
