Investors are increasingly turning to alternative assets like property, infrastructure, asset leasing, private equity as an important means to diversify their portfolio, to create a bigger income in an environment of low yields and as a hedge against inflation.
Aj Somal, financial adviser at Aurora Financial Planning says among his clients: “There has been a shift to investing in alternative assets, and a move away from traditional asset classes like bonds and equities.
He adds: “My clients, have been investing in property (buy-to-let), peer-to-peer lending, and buying premium bonds – with the later to mitigate tax.”
Aj Somal stresses that investing in alternative assets is not for everyone, but for those willing to invest, they can benefit from a sustainable income, and diversification within their portfolio.
What is Architas’ view?
Jon Arthur, multi-asset product specialist at Architas, agrees with the element of diversification within an investor’s portfolio: “I think that the key message for investing in alternative assets, in terms of our perspective, is diversification.
“Because there’s lots of different sub-asset classes, there’s lots of different idiosyncratic risks, and you don’t necessarily want to have a concentrated position exposure.
Arthur adds: “In terms of how we [Architas] invest in alternatives, we think diversification is absolutely imperative and especially for those investors that are the low or mid-risk profiles.”
Avni Thakrar, multi-asset product specialist at Architas explains how they allocate alternatives: “From our perspective, with the allocation to alternatives, within the market cycle we will go over and underweight certain sub-asset classes depending on where we are in the cycle.
Thakrar adds: “I think we’re expecting 2019 will be as volatile as last year, and [alternative assets] like asset leasing, specialist property, gold, anything with low beta sensitivity will help with those shocks. So, when we see major drawdowns, what it will do is, reduce that capital depreciation quite significantly, compared to more [traditional asset classes] like equities or bonds.”