Alternative Investments: Will They Really Make Me Richer?

Alternative Investments: Will They Really Make Me Richer?

Joel Colman

Joel Colman  -  1st January 2024

Amidst ongoing market turbulence and global geopolitical upheaval, growing numbers of investors are searching for opportunities that deliver strong and stable returns. Is this something that alternative investments can provide? And are the returns they offer significant enough to grow (and not just protect) your wealth?

In this post, I take a closer look at the alternative investment landscape and explain why the right alternative opportunities really will make you richer.

Alternative opportunities are increasingly popular, especially amongst the ultra-rich

First, it’s worth noting that the market for alternative investments is burgeoning in popularity. Assets under management – valued at $13.7 trillion in 2021 – are projected to reach $23.3 trillion by 2027.

So, who is responsible for this explosion of popularity for the alternatives market? According to the 2023 EY Global Wealth Management Research Report, the preference for alternative investments rises in proportion to your level of wealth.

Just 14% of the mass affluent include alternative investments in their portfolio. This figure rises to 29% for high-net-worth individuals and 55% for very-high-net-worth investors. And when it comes to ultra-high-net-worth investors, a huge 81% invest in alternatives.

In addition, consider that high-net-worth investors are significantly more likely to allocate a higher proportion of their investment portfolio to alternative opportunities. While retail investors only allocate around 5% of their portfolio to alternatives, this rises to 26% among high-net-worth investors – and a whopping 50% for ultra-high-net-worth individuals.

So, what is it about the alternatives market that’s particularly enticing to the super-rich?

Stability or volatility? Navigating the path to wealth

I’m a big fan of plain speaking, and always avoid jargon or technical terms unless necessary. But there are a few words that are useful when explaining the appeal of alternative investments: these include stability and volatility.

When markets are volatile – as they are now – prices fluctuations are not only frequent but high in magnitude. Generally, volatile assets are susceptible to price swings, making them riskier than stable ones, as they don’t provide returns with the same consistency.

Of course, if your investing horizons are longer term, you have breathing space to recoup your losses. Over time, stock markets tend to go up. However, while every portfolio needs a ‘growth’ pot, stability is also crucial for building your wealth. After all, you don’t want to lose everything whenever there’s a downturn in the market.

To hedge (technical finance speak for protect!) against volatility and inflation, you need to ensure that your portfolio also features stable assets: those that deliver consistent returns and offer a high level of security.

Naturally, there are traditional assets that provide stability – government bonds are an incredibly safe investment, for example. However, the trade-off is that they don’t tend to pay high returns. So, what’s the solution if you’re looking for both stability and growth?

Embrace alternative opportunities that deliver stable, consistent returns

Alternative investments – those that fall outside the traditional stock, bond and currency markets – have low stock market correlation. In other words, financial market price fluctuations don’t impact them. As a result, they’re incredibly useful – not only as a hedge but as they diversify your portfolio, spreading your investments across a wider range of asset classes.

And do they perform? Well, according to EY, 69% of ultra-high-net-worth investors were satisfied with theirs.

But ‘alternative’ is an incredibly broad term – one that encompasses everything from art and property to cryptocurrency and hedge funds. And while some alternative investments combine low risks with stable returns – more on that below – others have the potential to be more volatile than traditional investments.

So, what kind of returns can you realistically expect if you’re not willing to compromise on product security? And how should you go about narrowing your alternatives search?

Let me match you to a short-term, fixed income opportunity delivering returns as high as 18%

I’ve spent my career helping my clients exceed their financial goals – there’s nothing I love more than that buzz. At Hays Mews Capital Alternative Investment Division, we source quality alternative investments across secure asset classes from property to litigation funding, natural resources and forex, exclusively for high and ultra-high-net worth individuals. Specialising in the fixed-income space, we scour the globe for the best short-term investments – those that balance risk and return to deliver steady yet significant returns.

Typically, the investments we recommend offer returns of up to 18% per annum over a 1 or 2-year timeframe – and span a choice of interest payment options. How do we choose which product providers to partner with? One central reason for our success is the meticulous approach we take to the due-diligence process.

For starters, we look for companies operating in a secure sector with a proven track record – we’ll only consider those that have never defaulted on a client repayment. Plus, we focus exclusively on alternative investments with a regulated security trustee from a tier-one jurisdiction – essentially, the highest level of security it’s possible to offer. (Find out more about our approach to due diligence here.)

What else do you need to know about our approach? We believe in first-class experiences. Think bespoke, personalised luxury – but without any of the snobbery generally associated with investing.

Joel Colman
Joel Colman

Joel Colman

Co-Founder Director

Interested in finding out more about how I’ll bring stability, diversity and growth to your portfolio within a short timeframe? Just use the link below to arrange a free, no-obligations conversation with me.

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