What are alternative assets?
Alternative assets are investments outside conventional products like stocks, bonds, or cash. They often include private equity, hedge funds, real estate, and commodities, offering portfolio diversification and risk mitigation.
Types of alternative investments
Real estate
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Alternative investments vs. Stock markets
The value of traditional assets can get pushed down by a negative market event — and take forever to come back up. This is how these types of portfolios manage to generate rewards that outweigh the risks, the majority of the time.
Alternatives are steadier
In times of market turbulence, alternative assets prove their mettle as steadfast performers, showcasing resilience and stability. Unlike the rollercoaster ride of stocks, they offer a reliable haven for investors seeking a smoother and more predictable investment journey. Diversifying your portfolio with alternative assets can provide a buffer against market volatility and help you achieve a more balanced and secure financial future.
Why invest in alternative assets?
Investing in alternative assets presents a compelling case backed by robust data. Research shows that portfolios with a strategic allocation to alternatives have historically exhibited lower volatility and higher risk-adjusted returns. For instance, over the past decade, a well-diversified portfolio with alternative assets witnessed an average annual return of 8%, outperforming traditional portfolios by a significant margin. Furthermore, alternative assets have demonstrated a low correlation with traditional investments, providing an effective hedge during market downturns. By incorporating alternative assets, savvy investors can tap into uncorrelated markets, uncover hidden opportunities, and potentially enhance their long-term portfolio performance.
The traditional approach is failing
Alternatives reduce portfolio risk by half
Alternatives offer diversification beyond stocks and bonds. Their low correlation with traditional investments buffers against market fluctuations, reducing overall portfolio risk by approximately 45%.
Advantages and disadvantages of alternative investments
Advantages
Disadvantages
The shift to alternative investments
Embrace alternative strategies to navigate the ever-changing investment landscape and unlock untapped opportunities effectively.
Unlocking the billionaires' secret
Billionaires understand the key to achieving optimal returns lies in allocating more than half of their investable wealth to alternative investments, according to a survey of 50 ultra-high-net-worth family offices by KKR. These wealthy investors prioritize preserving and growing their capital and have significantly reduced their investments in hedge funds in favour of other alternative asset classes.
Investors prefer alternative wealth allocation
People with more than $1 billion in assets keep more than half their investable wealth in alternative investments.
“The greatest mistake investors make is to believe that what happened in the recent past is likely to persist”
Ray Dalio
Founder of Bridgewater Associates