Alternative investments are considered asset classes outside of traditional cash, bonds and publicly traded stocks.
This term should perhaps be updated, given how much investors of all types and sizes have been investing in alternative investments. These investors include some of the world’s largest endowment and sovereign funds—many of whom have weighted their portfolios in favour of what has been dubbed alternatives, plus real money online pokies Australia can be considered as another investment.
This runs the gamut from private stocks and debt to venture capital, crypto, wine, art and luxury watches. Even precious metals and gems may be considered alternative investments or “alts.”
Many investors and commentators on the markets are split on whether we’ve already passed through the recession or if another one is looming. The latter group includes the world’s largest fund manager, Blackrock, which is forecasting a downturn like no other.
Merchant Debt/Factoring
These are types of business loans. Specifically, they are loans providing funds to established companies that have a track record of cash flow and financial performance. As an investment, which is typically done through a fund or lender, it is effectively buying or loaning against future cash flows into a business, unlike gaming at American casinos where you can see a potential return.
The borrowing entity gets money to use as working capital or to expand faster up front. They give up a percentage or regular repayment to lenders as the money flows into their company.
A pro for investors is that these can include attractive yields, which may be directly or indirectly linked to underlying business assets.
Of course, no business is guaranteed to survive. So, to avert the cons of borrowers failing to make good, investors need to invest through an intermediary with low default rates and with a broad enough portfolio so that the performers outweigh any defaulters or delinquent payments.
Private Equity Healthcare Investments
From telemedicine to biotechnology, to cannabis, this space is exploding, especially in the wake of Covid. It is perhaps one of the best areas of growth for those seeking more upside in their portfolios.
There are a variety of ways to get involved in this asset class, from angel investing to investing through pre-IPO funds or VC and private equity firms.
The most obvious con is that not every one of these companies will make it in the end. The process of bringing new technology to market, and through all of the regulatory hurdles in this space, can be lengthy. Investors can offset this with a portfolio of these companies, investing in a variety, including ones with more growth potential and less risk.
This is an investment that can be incredibly impactful on the world and give investors a feeling of making a difference while also generating attractive returns.
Artificial Intelligence
AI investments continue to be trending. This can apply to investing in next-generation, AI-powered funds that analyze the market and invest for you. Automated, AI-backed investing can help take the headaches and time drain out of investing and more accurately invest based on more data points than any human team could evaluate.
There is huge potential for growth in AI startups that are successful. This is why many of the largest VC funds and notable angel investors have been going big into this sector. Of course, if you don’t understand these technologies, it may be hard to judge which will make it or not.
Real Estate
Real estate has long been one of the most popular alternative investments. While it may not make the top three this year due to interest rate trends and a cooling of peak home prices, this is still an asset class that can provide concrete downside protection and passive income.
I believe flight capital from traditional investments and crypto may help provide real estate with an extended run.
Ancillary Trends
There are also creative and niche ways to invest in these trends or combine them as well.
For example, you could invest in medical real estates like lab space and medical offices. You could look into Bitcoin ATMs instead of crypto. Ancillary investments could be raw materials and infrastructure used in other popular asset classes.