Alternatives

Australians have an “amazing love affair” with property, but many are limited in their investment exposure. At AIA’s recent annual conference, investors heard how three alternatives to direct ownership provide portfolio benefits with less hassle, particularly for income-seeking retirees.

“Like a good wine, the best vintages in private markets often come from challenging environments,” Franklin Templeton’s Tony Davidow says, predicting the recent dysfunction markets have endured could mean a strong vintage year for private equity.

Despite facing rising interest rates, a higher cost of capital and concerns about their borrowing base, non-bank lenders have made their place in the Australian economy in moments like this, when funding is needed and otherwise hard to get, says Thinktank’s Jonathan Street.

Absolute-return bond strategies should perform even in down markets, but a Morningstar report shows most failed to meet their own performance targets in a rocky 2022. However, as an alternative to traditional fixed income, these strategies still provide the defensive correlation, the research firm argues.

Up until recently, alternative investments were only really open to institutional investors, but with these now available at a wholesale and retail level the retirement strategy game has changed.

David Di Pilla’s listed property group is shaking things up with a fund that combines the best features of private and public investing to create a pro-active management style equity fund.

Up until recently, alternative investments were only really open to institutional investors, but with these now available at a wholesale and retail level the retirement strategy game has changed.

There are now more than 22,000 cryptocurrencies on the market, but most have small market capitalisations and unclear use cases, according to a recent Invesco report. The blockchain technology underpinning them, on the other hand, could change the infrastructure of finance.

For investors looking for alternatives to equities and fixed income, listed investment companies and trusts provide diversification and short-dated exposure to long-term investment strategies, not to mention inflation protection, industry leaders said at a recent event.

Analysts expect the bullish momentum for the safe-haven asset to continue amid sinking investor appetite for risk, with prices buoyed by an expected peak in US interest rates and a weakening US dollar.

Understanding the effect of economic changes on the stocks in a portfolio helps investors make smart allocation decisions. For infrastructure investors, adjusting the balance between defensive utilities and user-pays infrastructure stocks as conditions change can ensure superior returns relative to general equities, said ClearBridge Investments’ Nick Langley.

Diversification is invaluable, and this is especially apparent during times of disruption and uncertainty. Exposure to infrastructure assets can help investors take advantage of the current volatility, but keeping asset correlation in mind is key.