What are the main advantages of alternative investments?
- High diversification compared to traditional markets, alternative investments tend to have a lower correlation with listed stocks and bonds, which can reduce the overall volatility of the portfolio. For example, real estate, infrastructure, or private equity may perform differently compared to liquid exchanges during certain periods of market stress.
- Another advantage is potential for superior returns in the long termAlternative funds often target the "illiquidity premium" (you receive additional yield because the money is locked) and exploit less efficient markets, such as unlisted companies or specialized real estate projects. Private equity strategies, for example, aim to increase the value of companies through active management, restructuring, and operational growth.
- Another advantage is access to strategies and markets otherwise difficult to access. Thus, through alternative investment funds, you have access to types of investments that, as an individual, would be difficult or almost impossible for you to manage directly: loan portfolios, infrastructure projects, complex derivative transactions, direct financing of companies.
- Not least, customization of the risk-return profile. Certain alternative investment funds are designed for recurring income (e.g., credit or real estate rental funds), others for aggressive growth (private equity, venture capital), allowing fine tuning of your portfolio according to your objectives.
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