Five Reasons Why Alternative Assets are the Jam on Your Bread
Whether you are an investor or an investment advisor looking for unique opportunities, alternative investments are the jam on your bread when it comes to differentiating your portfolios and adding upside potential. Why do I use the analogy of bread and jam? Because bread is a staple in our diets and can be used in many circumstances, but it is the jam that makes it notable. Your ‘bread’ in this case would be your standard investments, companies you know, understand, and that have consistent long term returns and tack records. Alternatives are best when applied with discretion and taste. So here are five reasons, amongst many that you should consider alternatives as part of your asset allocation and diversification strategy.
Alternative investments can help diversify your portfolio into non-correlating asset classes that may have less volatility when the market shifts.
- Social Impact
Separating a percentage of your investment portfolio and deploying it away from low risk, slow-moving investments and into new and innovative companies has social benefits that are two-fold. It allows you to be part of a movement bringing new and innovative technologies, medicines, and ideas to the world. And second it avails you to profiting from your willingness to take measured risk.
Alternative investing can offer income in the form of structured financial products, private placement and other instruments in low-interest rate environments that are not producing strong yield.
- Low Correlation
Alternative investment opportunities come in many shapes and sizes. They approach financial markets differently than traditional investments and may not even reside in the same financial marketplace as the bulk of your traditionally invested money.
- Risk Management
While some may include similar investments as your other portfolio, the managers may treat them differently or with different objectives looking for opportunity selling long or short simultaneously.
That’s just five simple reasons to look at alternative investment opportunities. There are a wide range of styles and strategies in alternative investments with an ever changing playing field of unique instruments designed to create value. If you are looking to diversify your investments, considering alternatives is a good idea.