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The Alter-NATIVE series Five common alternative investments for your HNI clients

Five common alternative investments for your HNI clients

Investing in AIFs has the benefits of risk mitigation and ease of investing.
Edelweiss Feature Sep 21, 2017

We understand that Alternative Investment Funds (AIFs) offer investors an opportunity to diversify their portfolios and generate alpha. As this investment vehicle is gaining in popularity, it is also imperative that investors understand how it is helping them meet their investment objectives. The first step in that direction is to be aware of the multiple alternative investment assets that an AIF can choose to invest in.

Private Equity & Venture Capital – Private equity entails investing in any company that is looking to raise money privately while venture capital is basically a sub-set of private equity specialising in investing in early stage companies that exhibit huge growth potential. These are typically risky assets which have the potential to significantly enhance portfolio returns. By investing in these assets through AIFs, investors can mitigate the risk from these assets while participating in their return potential.

Real Assets – These are basically physical or tangible assets that have intrinsic value such as real estate or commodities. These assets usually have a storage cost involved and can typically be difficult for individual investors to maintain. AIFs can invest in real assets and give clients an opportunity to harvest returns from the same.

Hedge Funds – These are pooled investment funds that are formed to invest in a variety of strategies and asset types. Hedge funds differ from private equity and venture capital funds in that they invest in public equities and generally have greater redemption frequencies and liquidity. Investors can choose to take a balanced exposure to hedge funds by investing through AIFs.

Debt – Debt markets are large and often offer good risk adjusted return opportunities. However, they are not always easily accessible to investors. AIFs can make investments in debt, thereby making these opportunities available to investors.

While many of the above investment opportunities are available to individual investors, investing in the same through AIFs has the benefits of risk mitigation and ease of investing.

 

Past performance is not an indication of future performance. Investments in the securities market are subject to market risk.

Please read the Private Placement Memorandum carefully before investing.

 

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