Institutional investors are becoming increasingly interested in alternative investments (assets) – given that the returns on conventional financial assets – listed stocks and bonds – are going to be challenged over the next 10 years. In addition, alternative investments offer diversification, as ideally, they have low or negative correlation to shares and bonds.
But what is an alternative investment? Well, it depends on how to define it. That can include e.g. private equity, private debt, hedge funds, commodities, options, derivatives, private real estate, REITs (Real Estate Investment Trusts), and currencies.
Some alternatives tend to be more suited for institutional investors, but can be suitable and accessed by average private (retail) investors. However, this will be the topic of another blog post (within soon).
When it comes to portfolio allocation, many experts advise the private investor to hold between 3-8% of the financial assets in alternative assets.
Image sourced from Unsplash
Information from Maiyak is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.