How to invest in alternative and trusted assets
While there are many elements that underpin the world’s financial markets, trust remains one of the most important and underrated factors.
After all, investors buy and sell assets or speculate on price movements trusting that their transactions will deliver a viable yield, while it’s widely known that some asset classes are considerably more reliable than others.
But what exactly are alternative and trusted assets, and how can you profit from such entities in the financial market?
What are alternative assets and are they inherently trustworthy?
The term ‘alternative investment’ is often used broadly, but in simple terms it refers to asset classes other than equities, bonds or cash.
In this respect, they often play a pivotal role in any diversified portfolio, by optimising returns during times of economic tumult and when equity returns begin to diminish.
But what are the most popular alternative investments? Commodities are probably top of this list, particularly widely-traded examples such as oil, iron ore and gold. Arguably, gold is the quintessential example of an alternative asset, as it serves as a secure store of wealth during austere times and often sees its value rise in times of recession.
Derivative assets like currency are also classed as alternative investments, along with futures or options contracts which create a framework in which you can buy or sell something at a predetermined price and time in the future.
Interestingly, most alternative investments are made either directly or indirectly by institutional investors, including pension funds. This affords them a sense of credibility, which is only augmented by their ability to deliver increased returns during periods of typically low yields.
Remember, the returns from alternative assets tend to have a lower correlation to the standard asset classes, so they’re increasingly trusted to help offset market volatility.
What are the best types of alternative and trusted investments?
We’ve already touched on some of the alternative investment options available in the marketplace, but which of these are the best and most trusted?
Perhaps the most trusted alternative investments are those that deliver a secure and tangible store of wealth, including examples such as gold, real estate and even collectibles.
The reason for this is simple; as such options enable investors to access corporeal gains and security, with the underlying assets inherently valuable and capable of appreciating in value over time.
Beyond this, managed funds are also an increasingly popular alternative asset in the modern age. Not only do such assets provide immediate access to a diverse range of instruments (typically equities), but they’re also expertly managed and tailored to suit variable risk appetites.
Often, managed funds also target small and mid-cap companies directly, with these capable of delivering above average returns across multiple positions.
The key is to consider your range of options carefully as an investor, while realising which alternative investments best suit your risk profile and capital holdings.
