In the current investment environment, alternative investments appear increasingly relevant to many investors.
They may be able to bring a number of benefits to portfolios, notably diversification. But an understanding of this asset class can be hindered by complex terminology and fragmented discussion about what investment alternatives can realistically do.
This update of a report first published in July 2018 therefore aims to provide an introduction to this interesting asset class, looking at the different types of alternative investments, how they can be managed in a portfolio and our current outlook for them. We start by looking at more liquid types of alternative investment, such as hedge funds, before considering more illiquid investments such as private equity, infrastructure and real estate. The report has been updated to include our latest views on each of these investment approaches.
We stress that the appropriateness of alternative investments for individual investors will remain dependent on multiple factors, for example risk tolerance and liquidity, and that they will not be appropriate for all investors. Managing alternative investments within portfolios is also likely to be a much more involved process than for traditional investors. But the potential rewards for getting this process right are important, if you can create diversified portfolios that generate higher risk-adjusted returns over time and (in the case of illiquid investments) provide a premium for long-term commitment.
If you are interested in this report, please contact your personal banker or get in touch via the contact form at the bottom of this page. Please note that in the U.S. this report can only be distributed to an "Accredited Investor” as defined in the Regulation D under the Securities Act of 1933 (“the Securities Act”) and “Qualified Purchasers” as defined in Section 2(a)(51) of the Investment Company Act of 1940 (“the Investment Company Act”).