According to Walter Davis of Invesco, alternative strategies are those investments in anything other than publicly traded, long-only equities & fixed income.
These include:
However, for the purpose of clear definition in the Australian market, we should include property investment in the pool of traditional investing, due to the high level of homeownership and investment in Australia, which was at 65% in 2016.
What do alternative investments offer?
Alternative investments offer opportunities in global markets by providing 24 hour/7 days per week trading platforms – such as CFDs - while also having the opportunity for leverage, meaning you only need to pay a fraction (the spread) of the total trade to execute the trade.
They allow savvy investors to bet against the market, to make trades on movements before they happen, and reap the rewards should they come to fruition. However, the risks of alternative investments are greater than simply the loss of the amount invested (the spread), as the total trade and any losses need to be repaid for any unsuspecting investors.
Meanwhile, investment in alternative asset classes such as art & collectables provides diversification and capital growth opportunities, as well as the potential for incremental revenue from leasing or loan arrangements to private or corporate clients through brokers.
With any investment, there are risks and potential losses that may insure and should be considered before commencing any alternative investment strategy. Alternative investments offer just that, an alternative.
To effectively leverage the opportunity, speaking with a managed investment fund, will allow investors to pool their funds and the scheme to be operated by an expert in alternative investment strategies – making the ROI potential even greater than if you go it alone.