Talking Point  

The role of alternative assets in a portfolio

  • Explain how alternative assets work
  • Describe some of the challenges with alternative assets
  • Identify the advantages of alternative assets
CPD
Approx.30min
The role of alternative assets in a balanced portfolio
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Alternative assets have been gaining ground in recent years, as investors look for new ways to get returns.

But what actually are alternative assets, and what are the risks involved? Will they become more mainstream?

Some of these assets can sound far-fetched to the conventional investment professional - they include items such as music royalties - while others are simply deemed suitable for more sophisticated tastes, such as private equity funds.

But the real reason they have become more popular is that they offer real diversification to clients looking to balance out their exposure to equities.

Professional investors are now taking alternative assets seriously, and subjecting them to serious analysis. This CPD feature takes a look at how the investment world views them.

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. Which of the following is NOT considered to be an alternative asset?

  2. According to Hugo Thompson, assets that offer less liquidity trade at a lower valuation, true or false?

  3. Which of the following is NOT a problem with investing in musical royalties?

  4. Real assets are never 100 per cent correlated to equities, true or false?

  5. Why is Charles Hovenden sceptical about absolute return funds?

  6. Real assets should not be considered a full substitution for bonds, true or false?

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You have successfully answered all the questions correctly, well done!

You should now know…

  • Explain how alternative assets work
  • Describe some of the challenges with alternative assets
  • Identify the advantages of alternative assets

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