Aug 8, 2023|General- 3 min
An Attractive Asset Class
The benefits of alternative investments include diversification, higher potential risk-adjusted returns, and reduced volatility. They also provide access to niche markets and unique investment opportunities that are unavailable in public markets.
Historically, alternative investments have been reserved exclusively for sophisticated institutional investors and ultra-high-net-worth individuals, but the landscape is changing. More than 83% of financial professionals believe that all retail investors should have access to alternative asset classes.
The Importance of Due Diligence
The limited transparency and uniqueness of each alternative asset class requires extensive due diligence.
Unlike publicly traded companies, up-to-date information is rarely available on private companies. The evaluation of the distinct characteristics and risk profiles of private companies requires specialized knowledge. Professional investment managers must conduct extensive research and analysis to assess financial performance, the quality of management, market trends, regulatory environments, and potential exit strategies. They access such information through trusted relationships developed over time with fund managers, law firms, seasoned advisors, industry experts, etc.
Accessing Alternative Investments
Other challenges posed by alternative investments include their illiquidity, high minimum investment amount, and the lack of specialized knowledge. These assets are typically offered through network-based relationships, restricting access to elite investors.
Through their extensive networks, professional investment managers have access to exclusive investment opportunities and often negotiate better terms and reduced fees for their clients.
The Role of Professional Investment Managers
Professional investment managers help investors navigate the complex world of alternative investments, from identifying investment opportunities, assessing their risks, and managing the investment until exit.
Based on the investment objectives, risk tolerance and financial situation of each client, professional investment managers develop a customized investment strategy. Then, they communicate regularly with their clients to keep informed of the investment performance and changes that may affect their targets.
The Advantages of Working with Professional Investment Managers
Access to Exclusive Investment Opportunities: Investment professionals provide clients access to exclusive opportunities through their extensive networks and relationships with managers, funds and platforms.
Expertise: In-depth knowledge and experience with alternative investments lead to qualified advice and, hence, better outcomes.
Risk Management and Due Diligence: Through rigorous risk management and due diligence, clients benefit from optimal allocation strategies that mitigate risk and maximize returns.
Tailored Investment Strategies: A customized approach integrates selected alternative investments according to each client's unique circumstances and preferences.
Ongoing Management and Monitoring: Continuous oversight and detailed reporting enables client to monitor their investment performance and request adjustments as necessary.
Transparency and Communication: Detailed reports enable clients to understand the performance of their investments, ask questions, and make informed decisions.
Working with the Right Partner
Alternative assets present unique investment opportunities that diversify investment portfolios and improve risk-adjusted returns. But such assets are normally available only to large institutional investors that have the necessary resources to conduct extensive due diligence and risk assessment. A professional investment manager can assist in identifying alternative investments, assessing their risks and benefits, and determining whether they suit the investment goals and risk tolerance of each client.
The Family Office is among the most trusted advisors with an extensive track record in alternative investments. Our team can navigate the complexities of this landscape and create a tailored investment strategy that aligns with your distinct requirements and goals.