Alternatives

ALTERNATIVE INVESTING

Key points

  • Alternative investments are non-conventional assets excluding stocks, bonds & cash.
  • Investing in alternatives helps investors add diversification to their portfolios.
  • In recent years, the growth of alternative finance has opened up new avenues to investing in alternatives.

The value of alternative investments

Within investing, diversification is key as it reduces risk by spreading your capital into a range of different assets. Good diversification will often involve investing in a range of different industries, regions, asset classes, and investment approaches.

Diversification aims to deliver returns by investing in different areas that would all react differently to the same event. If a client’s portfolio consisted of only one asset class, a singular event for example an equity market correction could threaten the value significantly. Through diversification, clients can position their portfolio in various areas which will not be equally affected by a singular event.

Historically, investing often consisted quite simply of a mix between equities and fixed interest products, however, more recently we have witnessed and embraced the growing trend that is alternative investing.

What are alternative investments?

An alternative investment is an asset that cannot be categorized in the conventional investment categories, cash, equities, or bonds. Alternative assets were previously often considered to only be available to institutional investors or high-net-worth individuals, due to their complexity, lack of liquidity, lack of regulation, and in many cases increased level of risk.

Increasingly, however, alternative investing is becoming more mainstream with certain fund houses making it a simple, accessible, regulated, and liquid form of investing for clients. These fund houses make use of megatrends within the market and pockets of value in underrepresented asset classes such as clean energy, listed real estate, convertibles, and so on.

deVere is pleased to able to offer our clients access to alternative investments to add diversification to their portfolios. Click on this link to learn more.