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| Image Source: sterlingtrust.net |
The four most important alternative assets identified are:
1. Real estate assets that are primarily investments in land property including farmlands;
2. Private equity from unlisted companies and startups including venture capitals;
3. Hedge funds that are more popular and visible; and
4. Institutional infrastructures.
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| Image Source: lapfinvestments.com |
With its global data coverage, a recent Preqin report highlights that alternative assets under management expanded to $6.9 trillion at the closing of 2014, marking an increase from $6.2 trillion in 2013. As private equity and venture capitals reach new heights, there have been reports of investors deploying higher allocations in alternative assets since the start of 2015. The higher risk-return trade-off projected for alternative assets make such investments very attractive despite the initially perceived underwhelming performance.
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| Image Source: usatoday.com |
By bringing qualities to portfolio construction through diversification, reducing risks and increasing returns, and performing well over the long term, investors are encouraged to increase their exposure rather than cut back their provisions for alternative assets. As the Preqin report surmises, those that continue to innovate with new products and solutions while listening to investor demands for better alignment of interests may well be winners in 2015.
Trinitas Partners LLC is a private equity investment company specializing in identifying superior investments within sectors characterized by favorable supply and demand dynamics and involve hard assets and real property. Learn more about the services the company offers here.
