Alternatives Strategy

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Alternatives Strategy

Although many investors see alternative investments as exotic investments that are out of their reach, reserved for ultra-high-net-worth individuals and sophisticated institutions, the reality is that alternatives are becoming more mainstream. 
 
One of the benefits from using the Managed Discretionary Account is that investors are able to get access to a range of alternative investments strategies, that are not readily available to individual investors.
 
Our Alternatives Strategy invests in a range of investments managed by specialist investment managers that seeks exposure to
non-traditional assets such as commodities and investment strategies such as “global macro” to generate returns that are not highly correlated with traditional asset classes. The Portfolio’s objective is to provide relatively consistent ‘equity-like’ returns over the medium to long term.
In effect the Alternatives portfolio is a strategy rather than an asset class in itself. Alternatives represent different approaches to investing across a variety of markets and asset classes.

A useful way to think about alternative investments is to differentiate between what we would term “contents” and “containers.”

Contents

 

Certain investments, such as currency and unlisted real estate investments, are truly alternative assets in that they have little relation to the performance of traditional stock or bond investments.
Then there are alternative strategies—those that trade in predominantly the same markets as traditional investments, but approach the markets in a unique way, using, for instance, long/short strategies.
Either way, it is the “contents” as a product of their unique mix of underlying risk factors that determine how these investments contribute to the diversification of an overall portfolio.

 

Containers 

 

The “containers” differentiation refers to the types of vehicles in which these investments might be found. For example, in Australia, wholesale funds, private equity, venture capital and offshore unregistered funds, all of which are structured differently for a variety of management, liquidity, legal or regulatory reasons.
These vehicles may include similar investments, but can encompass many styles and methods of investing across different markets. Hedge funds, for example, are categorised as such because of their focus on producing returns that have lower correlation to traditional equity and fixed income markets, not because their underlying “contents” are all the same.
Suggested Minimum Investment Timeframe – 7 years

 

An example of a Satellite portfolio that invests in alternates assets
Physical gold exposure  20%
Physical commodities  20%
Agricultural land and operations  20%
Global private equity  20%
Venture capital  10%
 Long short hedge fund  10%

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