Boost portfolio diversity and risk-adjusted returns with alternatives
Navigating markets today is even more challenging, with long-term return expectations across traditional assets declining and investors globally having to look harder for returns.
The key characteristics of alternative assets means they provide greater portfolio diversification and typically generate higher returns than public market assets. Capturing the benefits of alternative investments will be an increasingly important to achieving key investment goals.
At Bank of Singapore we aim to provide clients with institutional access and global opportunities in alternative investments across venture capital, private equity, private credit, hedge funds, real assets and direct investments.
Simply put, alternative investments are assets that do not fall into traditional asset classes of stocks, exchange traded funds, bonds and cash.
Alternative investments include private equity, private credit, hedge funds and real assets. They can give you access to unique opportunities and gain exposure to other pockets of economic growth to build your wealth.
Alternative investments tend to behave differently than traditional assets and adding them to a portfolio can offer benefits.
| Enhance returns |
| Alternative investments potentially offer alpha generation through alternative sources of return that are less affected by macroeconomic changes. |
| Lower volatility |
| Many alternative investments are less volatile as they are less reliant on broad market sentiments, and tend to exhibit lower correlation to traditional investments, making them a good choice for those in search of portfolio stability. |
| Broader diversification |
| Alternative investments have a low correlation to traditional asset classes and can help provide portfolio diversification by offering access to a wide range of alternative sources of risk and return. |
| Access to unique investments |
| Alternative investments in private markets provide access to investments that are not traded in the public space, for example by being an early investor in a start-up. Through private market funds, co-investments and direct investments, you can include cutting-edge companies or unicorns at the forefront of technology, healthcare and sustainability in your portfolio. |
While alternative investments share key traits, they are also a diverse asset class. Here are some of the most common types of alternative investments.
| Private equity |
| Private equity invests in non-publicly traded or private companies in exchange for equity or ownership. There are many subsets of private equity, including venture capital, growth capital and buyouts. |
| Private credit |
| Private credit or private debt are investments that are not financed by banks or traded or issued in an open market. Lending within private credit include direct lending, mezzanine, distressed debt, and specialty financing. |
| Hedge funds |
| Hedge funds are pooled investment funds that use a range of non-traditional strategies such as long-short equity in an effort to maximize the overall return potential and diversification of a portfolio. |
| Real assets |
| Real assets are tangible assets such as real estate and infrastructure. Financial investments with such underlying assets can provide a hedge against macroeconomic factors such as inflation and currency value fluctuation. |
| Direct investment |
| This alternative investment includes direct investment in startup and private companies, which makes for high risk and high reward investing. |
