Alternative Investments Bring Expenses Back Into Conversation

One of the first purchases I made after graduating from Purdue was a new mountain bike. The year was 1993, the world was my oyster, and I wanted to ride off-road. Four hundred dollars got me into the game. The thing was a death trap — bad brakes, no suspension, rigid steel frame. Midway through the summer, I ejected forward on a downhill descent. My face landed in the mud eight inches to the left of an old steel fence post. I sold the bike and wrote the sport off as "crazy."

Twenty-seven years later came COVID. Like many others, I was bored silly with the restrictions put on the world. I went to the mountain bike store with my business partner Bridget one day at lunch. The bikes looked nothing like the one I had sold in the '90s. Mountain bikes had evolved into marvels of modern technology. But when I looked at the prices, I was additionally shocked — these modern bikes cost 10 to 20 times what my after-college bike had cost.

My brother said when you ride a modern mountain bike and experience the technology involved, you realize the bikes are actually worth the money and might even be a "good deal." A month later, I pulled the trigger on a new bike. Six years later, riding is still my main warm-weather hobby. Sometimes things cost more for a reason.

At Oak Partners, we began to adopt a fiduciary business model around 2010. A key part of this process was raising our awareness — on an almost obsessive level — of investment product expenses. Driven by the movement toward passive index-based investing and the emergence of the Exchange Traded Fund (ETF), the logic was clear: lower investment expenses left more for the people we serve. Wall Street was also on what became known as the "road to zero."

As the current bull market ages, it has become heavily concentrated. As of early 2026, just seven stocks (Apple, Nvidia, Microsoft, Amazon, Alphabet, Meta, and Tesla) now account for roughly 35% of the S&P 500 index total market capitalization (source: S&P). Investors using S&P 500 index-based funds believe they are diversified over 500 stocks, but under the rug are largely invested in seven technology stocks. Wall Street took notice, and the race to zero paused. Alternatives were developed.

As investors, it's important to understand this trend. As new alternatives are introduced into portfolios, investment expenses may be more of a factor in the conversation than they have been over the past decade.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing includes risks, including fluctuating prices and loss of principal. No investment strategy can guarantee a profit or preserve against loss. Past performance is not a guarantee of future results.

Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at marc.ruiz@oakpartners.com. Securities offered through LPL Financial, member FINRA/SIPC.