Alternative Investment 

Guide to investing in alternatives

  • Understand whether infrastructure and gold have a place in an investor's portfolio.
  • Learn whether investment trusts are the best way to get exposure to alternative assets.
  • Comprehend whether collectible investments can be a useful portfolio diversifier or avoided altogether.
CPD
60min
Guide to investing in alternatives

Introduction

Alternative asset classes have been under the radar for many years but with improved ways of accessing asset classes such as infrastructure and gold, investors now have more options.

Central bank policy has driven up the correlation between equities and bonds, forcing advisers and their clients to look at more unusual assets for returns and income.

Ross Andrews, director of fixed rate bond provider Minerva Lending, points out: “With inflation likely to remain above target for some time due to sterling's weakness, the struggle for people to keep their savings real has no obvious end in sight.

"In this negative climate, more needs to be done to raise awareness of the savings risk, which is wreaking havoc with people's cash.

"Many people are still unaware that, in real terms, their savings are losing value.” 

He suggests: "It’s no surprise more people are looking to alternative investments to keep their returns real. But when they do, they may wish to seek independent financial advice.”

While there is an appetite for alternative assets, clients may well be unaware of the best way to get exposure and the pitfalls to avoid.

This guide will look at the rise of infrastructure as a more mainstream asset class and how gold can fit into a client’s portfolio, alongside bonds and equities.

It will also explore whether the investment trust structure is the best way for investors to get exposure to alternative asset classes and why that is.

Finally, collectible investments have come under scrutiny after several scams in which investors lost money. But can investing in fine wine or vintage cars be a suitable and even profitable investment for some clients?

Contributors to this guide include: Nick Edwardson, multi-asset investment product specialist at Kames Capital; Annabel Brodie-Smith, communications director at the Association of Investment Companies; Alex Scott, deputy chief investment officer at Seven Investment Management; Darren Cooke, chartered financial planner at Red Circle Financial Planning; Paddy Dear, co-founder of Tetragon; Ben Morton, portfolio manager of infrastructure portfolios at Cohen & Steers; Stephen West, a partner and director at Gravis Capital Partners; Ian Sayers, chief executive of the AIC; Mike Pinggera, manager of the Multi-Strategy Fund at Sanlam Four; David Hambidge, director of multi-asset funds at Premier Asset Management; Claire Walsh, chartered financial planner at Aspect 8; Sam Mudie, portfolio manager at Cult Wines; Jamie Ritchie, worldwide head of Sotheby's wine; FCA.

eleanor.duncan@ft.com

In this guide

CPD
60min
  1. Mr Scott lists the attributes of infrastructure as an asset class, but which one of these does not apply?

  2. Mr Hammond says typically a long-term strategic allocation to gold will account for what percentage of an investor's portfolio?

  3. Mr Scott says: "We access gold through exchange-traded products backed by physical gold holdings. In our view those are a robust way to access gold without the costs and difficulties of owning gold in physical form". True or false?

  4. According to Mr Hambidge, alternatives have gained in popularity since when?

  5. Ms Best lists several things investment grade collectibles can provide in a portfolio, but which one is the odd one out?

  6. According to Ms Best, what type of investor may benefit from a small allocation to collectibles?

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