For investors, a key principle of investing is diversification to mitigate risk. One of the ways to diversify your portfolio is to include alternatives into the mix.

What are alternatives? 

Alternatives can be categorised as not one of the traditional asset classes namely, stocks, bonds, cash, and even property. Alternatives could include cryptocurrency, investing in emerging markets, hedge funds, gold and precious metals, art and antiquities, venture capital start-ups and NFT’s etc.

“In essence, an alternative investment is any investment that is not one of the three traditional asset types (stocks, bonds and cash).”

It can be quite daunting with so many alternative investments to choose from. Your adviser can help you narrow it down according to your individual financial circumstances.

What percentage of your portfolio should you invest in alternatives?

There are many thoughts on this, but generally it is suggested at between 10-20% for alternative investments depending on your individual financial circumstances. You adviser will be able to give you recommendations on diversifying into alternatives according to your risk appetite.

Possible benefits of investing in alternatives
•    It allows you to diversify your portfolio
•    They are illiquid, meaning they can be easily sold or converted to cash
•    Alternatives could increase your income by offering higher returns than traditional investments - there is a possible higher risk, but also possible higher returns
•    It could help mitigate market volatility as they don’t typically correlate to the stock markets *

Acuma HK offers an actively managed Diversified Liquid Alternatives option through dVAM funds. Chat to your Acuma adviser about adding alternatives to your portfolio [email protected]
*alternativeinvestmentcoach.com

Please note, the above is for education purposes only and does not constitute advice. You should always contact your Acuma HK adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.