Investment performance is greatly determined by asset types in which an investment portfolio includes.
A diverse range of asset classes exist, and each comes with its own unique potential for performance and level of risk. Alongside options like commercial property, equities like stock market funds and fixed interest options, alternative funds are an asset class sometimes present in portfolios.
Defining alternative funds
Alternative fund is a title given to a fund that invests in a portfolio composed of alternative assets, or one that operates with a niche strategy that isn’t correlated with financial markets.
The aim of investing in alternatives via a fund is to enable private investors to effectively spread risk in the portfolio across several underlying alternative investments. This strategy is designed to reduce volatility.
Alternatives are typically illiquid with no public market to sell or buy shares on. As a result, investors must align their liquidity requirements to the fund strategy.
Examples of alternative funds
Hedge funds, private equity, derivatives contracts, infrastructure, absolute return contracts, real estate and managed futures are all examples of alternative investments. Investors should note that the risk and return profiles of alternative funds can vary considerably.
Do you need help with investment planning in Shropshire or Chester?
At Hartey Wealth Management, we believe in a proactive approach to market volatility. We invest time in considered research and analysis to make informed choices on how we manage portfolios.
If you have questions about asset classes like alternative funds, reach out to our expert team today.
