A new type of mutual fund has captured investors’ attention. So-called buffer funds are so appealing that one industry analyst has referred to them as “candy.” Why? As The Wall Street Journal describes them, buffer funds offer investors “the chance to chase stock returns while also protecting against a potential market slide”—a seemingly ideal combination, especially for those in, or near, retirement.

But funds like this aren’t perfect. They’re complicated—relying on options strategies—and they tend to be expensive. One such fund, the JPMorgan Equity Premium Income ETF (ticker: JEPI) carries an expense ratio of 0.35%. By comparison, a simple S&P 500 index fund can cost as little as 0.03%. Buffer funds are also likely to be tax-inefficient due to the level of turnover within the funds. Finally, and perhaps most significantly, some question whether these funds will even work as promised during periods of market stress. Because they have such short track records, this is yet to be determined.

For all these reasons, I wouldn’t rush to buy an investment like this. But that doesn’t mean I would never buy one. While I generally recommend simple, low-cost funds, non-standard investments can make sense in a portfolio under certain circumstances, such as the following:

1. When it comes to structuring a portfolio, investors often talk in terms of “core” and “satellite” positions. In my view, you should allocate the core—that is, the majority—to simple and proven investments. But if you wanted to hold a buffer fund, or something else unusual, you could hold it in a small satellite position to manage risk. How large an allocation is appropriate for a satellite? I generally recommend 5% or less. That way, even if something goes wrong, it’s unlikely to put a significant dent in your overall portfolio. At the same time, if it does well, 5% is enough to make a positive difference.
2. If you want to hold a particular investment because it aligns with your values, that would be a valid reason to hold something other than standard index funds in your portfolio. Consider the S&P 500. Among its holdings are two tobacco companies, which I personally find abhorrent. If there were a fund that held the other 498 companies in the index, and excluded those cigarette makers, I’d gladly choose it. It might do a little better or a little worse than the standard S&P 500, but that wouldn’t be the primary consideration. The reality is that personal finance isn’t just about numbers.
3. Everyone has their area of expertise. And while I believe it’s difficult to pick stocks, it can help tilt the odds in your favor if you lean on that expertise, choosing companies where you really know the market. I recall, for example, a cardiologist describing what it was like to see the first pacemaker back in the 1950s. He chose to invest in Medtronic, the inventor of the device, and did very well over the years. I’ve seen the same sort of thing more than once. While stock-picking is still very difficult, and I don’t recommend it, this is another situation in which it would be reasonable to make a higher-risk bet.
4. Another circumstance in which it can make sense to pick stocks: when it’s an opportunity to learn. In fact, I’ll often recommend to young people that they try choosing a few stocks. It can be a useful exercise to see how corporate balance sheets and income statements translate—or don’t translate—into changes in stock prices. Even if you rely mostly on mutual funds, it can be helpful to know how the stock market works under the hood.
5. Over the years, I’ve met a number of folks who have made angel investments. Some have scored home runs, while most acknowledge that their returns have been middling. But that’s not why they do it. Instead, what they enjoy is the opportunity to see new technologies and to help new entrepreneurs. Especially for folks in retirement, this can be very enjoyable, and the financial returns are secondary.
6. For the past 10 years, the market has been driven by a handful of large technology companies—Apple, Amazon and so forth. And for years, investors have fretted about the market becoming more and more top-heavy. Despite this, the market has only continued to rise and to become even more top-heavy. Today, the three largest stocks in the S&P 500 account for more than 20% of the index’s total value. But as the standard investment disclaimer goes, past performance does not guarantee future results. At some point, these trends might reverse. That’s why it wouldn’t be unreasonable to choose an investment or two that deviate from the standard index fund methodology. There is, for example, a version of the S&P 500 that holds an equal amount in each of its constituent stocks, rather than weighting them by size. This would effectively sidestep the concentration risk.
7. The final reason you might include something a little different in your portfolio: simply because it’s fun. Working in personal finance, it’s my responsibility to emphasize the difference between investing and gambling. But again, as long as it’s just a small satellite, I think it’s okay to have a few things that fit in the “fun” category. That might be a cryptocurrency, the stock of your favorite sneaker company or an angel investment in a friend’s new startup. I’ve seen folks own stakes in everything from bowling alleys to minor league sports teams. In every case, they weren’t comparing the returns to a benchmark. For these small investments, it was entertaining, and that was enough.