Can Alternative Assets beat Warren Buffett?

Abstract

The aim of this project is to demonstrate that diversification always adds value to traditional portfolios. This diversification will be based in alternative assets that their low correlation and powerful return risk relationship creates more efficient portfolios in terms of the Jensen´s alpha. To demonstrate this Warren Buffett´s investment vehicle, Berkshire Hathaway, will be used to add alternative assets with the expectation to obtain more return and a more efficient portfolio in terms of alpha. The main indexes of each alternative asset will be used as a reference to obtain the calculations required, they will be obtained from Thomson Reuters Eikon terminal and the Bloomberg terminal. Finally, the conclusions will show that even for one of the most profitable investments vehicles of the recent years is possible to obtain a better return risk relationship if they diversify in efficient alternative assets.