Alternative assets are characterised by their low correlation with traditional financial markets, such as stocks and bonds. These assets include, for example, hedge funds, real estate investments, private equity and commodities. Their attractiveness lies in their ability to diversify the portfolio and improve the overall risk-return ratio.
1. Hedge funds: in a context of low bond yields and volatility in equity markets, hedge funds offer alternative investment strategies that can generate additional returns. Strategies such as those related to macroeconomics, opportunistic long/short trading and merger arbitrage provide opportunities for extra returns. Hedge funds are known for their low dependence on the stock market and their ability to generate returns even in times of market downturns.
2. Real estate investments: real estate investments remain attractive, despite structural changes in the sector related to e-commerce. While traditional shops may come under pressure, industrial real estate can benefit from these changes. Global diversification is essential, as investing in international real estate markets offers growth opportunities with low correlation to global equity markets.
3. Private Equity: private equity has grown in popularity in recent years, with minimum investment amounts decreasing. This rapidly booming sector offers greater diversification and an illiquidity premium over public equity. Private equity is subject to different performance factors compared to traditional asset classes, making it attractive even in difficult times.
4. Commodities: commodities, such as oil and precious metals, can add value to a portfolio as alternative assets. Their low correlation with stocks and bonds makes them an attractive option. Moreover, in times of low real returns and economic uncertainty, the prices of gold and other precious metals often remain strong.
Alternative assets, including hedge funds, real estate investments, Private Equity and commodities, offer significant diversification opportunities. These options allow investors to balance their portfolio and mitigate the risks associated with traditional investments.
It is important to emphasise that alternative investments require detailed due diligence and careful selection of funds and managers. However, when properly managed, they can contribute significantly to the stability and performance of a portfolio.
Alternative assets offer investors valuable tools to diversify their portfolios and cope with uncertainty in the financial markets. Credinvest is committed to providing innovative solutions in this area, helping clients to implement their strategies and achieve their investment goals.
Login