Over the past few years, alternative asset options, acquired mainly by wealthy, high-net-worth individuals or institutional investors, have become more accessible to retailers, individuals, and investors seeking to diversify their investment portfolios. Diversification of portfolios helps investors widen their pool of investments that aren’t simultaneously affected by the market. Investors have discovered that some alternative asset classes are uncorrelated to the market, so they are protected from its volatility resulting in higher rewards and less risk. If one is an institutional or individual investor looking for alternative investments, here are the top 5 options to consider.
As the name suggests, hedge funds help hedge the possible investment risks. They do so bycollecting capital from multiple investors and simultaneous purchasing and shorting a bunch of assets in a long-short equity strategy. Their goal is to generate returns through both ups and downs of the markets. Investment in multiple assets helps increase the possibility of positive returns.
Venture capital firms fund privately-owned start-up companies at the initial stage of their development and aim to proliferate. The investors gain returns when these companies go through IPO, buy stocks, or are purchased by other companies. Venture capital is a long-term investment as many start-ups take years to establish.
Real estate is the oldest form of investment. There are three ways one can invest in real estate; buying rental properties as an individual investor, joining a real estate investment group, or buying shares in a real estate investment trust. Investing in rental properties also provides passive and reliable income through tenants.
Natural resources such as crops, livestock, fossil fuels, and precious metals lie under the umbrella of commodities. They tend to be volatile due to the uncertainty of natural disasters and world events. The prices of such assets are directly proportional to their demand. For this reason, they are a better long-term investment than a short one. The most secure way to benefit from the rising rates of commodity prices is to buy into ETFs. Through ETF investments, individuals get a bunch of assets that they can purchase and sell during market hours, reducing risk and exposure.
SPACs are special purpose acquisition companies. They are publicly traded vehicles that raise capital and purchase private equities. This is a quicker, less complicated, and more efficient way of publicly listing stocks without going through an IPO. SPACs are attractive investments as they target higher valuations, rapid capital growth, fewer risks, and fewer regulations. SPA firms have rapidly increased in the past decade and have raised billions of dollars.
Some SPACs also failed in the past due to their investment in private equities that meet the target value. For this reason, more investors have experienced losses. For SPACs to avoid such risk, they must go through a systemized, monitored, and analytical research on their investments and purchases. At Energy SPAs, they believe in investing wisely and responsibly. They work in the interest of their sponsors, investors, and equities.
Energy SPAs are the leading global company that was established in 2007. The founders have an experience of over 28 years in alternative investments, including private equities and commodities, real estate, global credit, hedge funds, global infrastructure, technological innovations, life science, and insurance. They manage $649 billion in assets. They believe in building successful, resilient businesses that lead to better returns, stronger communities, and economic growth that benefits everyone.