What is the case for investing in alternative investments? Find out in this presentation by William Kelly, CEO of Chartered Alternative Investment Analyst (CAIA) Association.



Alternative investments are non-traditional asset classes that go beyond the traditional stocks, bonds, and cash. They can include a wide range of assets such as real estate, private equity, hedge funds, commodities, infrastructure, art, and more. Here's a case for considering alternative investments in your portfolio:

1. Diversification

Alternative investments can provide true diversification by exhibiting low correlation with traditional asset classes like stocks and bonds. This means their performance might not be closely tied to the broader market, which can help reduce overall portfolio volatility.

2. Risk Management

Alternative investments can act as a hedge against market downturns. Their performance might be less affected by market fluctuations, providing a potential cushion during periods of market stress.

3. Potential for Enhanced Returns

Certain alternative investments, such as private equity and venture capital, offer the potential for higher returns compared to traditional assets. This can boost overall portfolio performance.

4. Access to Unique Opportunities

Alternative investments give investors access to markets that might be less accessible to the general public, such as private companies or specific sectors like real estate.

5. Inflation Hedge

Some alternative investments, like real estate and commodities, tend to perform well during inflationary periods, providing a hedge against the eroding value of money.

6. Long-Term Focus

Many alternative investments have longer investment horizons, aligning well with investors' long-term financial goals.

7. Income Generation

Certain alternative investments, such as real estate, infrastructure, and income-focused hedge funds, can generate consistent income streams.

8. Portfolio Customization

Alternative investments allow investors to tailor their portfolios to specific goals or risk preferences. For example, investors seeking higher income might consider real estate investments.

9. Expert Management

Some alternative investments, like hedge funds or private equity funds, are managed by experienced professionals who use sophisticated strategies to navigate various market conditions.

10. Early Exposure to Innovative Industries

Alternative investments like venture capital provide exposure to innovative startups and emerging technologies that can shape the future.

11. Non-Cyclical Opportunities

Certain alternative investments, such as renewable energy projects or agriculture, can provide opportunities that aren't closely tied to economic cycles.

12. Illiquidity Premium

Some alternative investments, such as private equity or real estate, require a longer investment horizon and offer potentially higher returns as compensation for the illiquidity.

13. Low Interest Rate Environment

In a low-interest-rate environment, alternative investments might offer better yield than traditional fixed-income options.

However, it's important to note that alternative investments come with their own set of risks

Lack of Liquidity

Many alternative investments have longer lock-up periods, meaning you might not be able to access your funds quickly.


Alternative investments can be complex and require a deep understanding of the underlying asset class.

Higher Fees

Alternative investments often have higher management fees and other costs.

Limited Regulation

Some alternative investments, especially those in the private markets, might have limited regulatory oversight.

Before adding alternative investments to your portfolio, carefully consider your risk tolerance, investment goals, and the potential impact on your overall portfolio strategy. It's also wise to seek advice from financial professionals who specialize in alternative investments.


More Investing News & Investment Analysis ...



"The Case for Alternative Investments "