In today’s dynamic investment environment, traditional asset classes such as stocks, bonds and cash may not fully meet the diverse needs of investors. As a result, more individuals and institutions are turning to alternative investments to discover new sources of potential returns and diversify their portfolios. Alternative investments go beyond conventional financial instruments; mainly comprising private capital, real assets and hedge funds. These alternatives offer distinct characteristics and the potential for higher yields, particularly during low-interest rate periods. By exploring alternative investments, investors can tap into unique opportunities that can enhance their returns and broaden their investment strategies.

Investing in Alternative Assets: A Guide for Investors

Investors can access alternative investments through various avenues, including fund investing, co-investing and direct investing.

Fund Investing: This is an ideal starting point for inexperienced investors with limited resources. Investors contribute capital to a fund, which then handles the process of identifying, selecting and making investments on their behalf. Fund investors typically have little control over the underlying investment decisions.

Co-Investing: Once investors get more comfortable with investing, they often acquire exposure through co-investing. Through co-investing, investors can make indirect investments in assets through the fund while also having direct exposure to the same assets thanks to co-investment rights. This enables investors to participate in specific deals alongside the fund, expanding their involvement.

Direct-Investing: Direct investment in alternative assets is often reserved for larger, sophisticated investors, with little to no involvement of intermediaries. This approach provides investors with greater control, flexibility and the opportunity to leverage their expertise for potentially higher returns.

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