Alternative investments have been slowly making a hole in investors' portfolios. However, it has become more prevalent in recent years, reflected in the numbers handled by the Preqin consultancy. These numbers show that investing in alternatives is here to stay.

In particular, a study shows investment in alternative asset management company has picked up speed in the past few years, with assets under management reaching $10,310 billion in 2019 and predicting that they will reach more than $14 billion by 2023.

Why is the growth happening?

The low-interest rates we have and are likely to have for the next few years have pushed people to make these investments. In fact, at its last meeting in July, the European Central Bank confirmed that it will keep interest rates low until at least 2024. This change in monetary policy is in line with the new inflation strategy that the bank announced a few weeks ago. Because of this, many investors are looking for other ways to make money besides fixed income and avoiding traditional listed securities.

"In the past, this type of asset was already a big part of the portfolios of large universities, pension funds, and other large institutional investors. However, family offices and private investors also choose to invest in alternatives, especially private equity in its different forms and, more recently, in infrastructure projects or private debt.

And that's why, when markets don't do well or when there's a lot of uncertainty, many investors are wary of the stock market and look for assets that don't move with the market. There are two parts to the goal. On the one hand, try to avoid periods of volatility; on the other, try to spread your money around more.

Investment in alternatives assets

Let's look for a definition of what it means to invest in alternative assets. First, traditional financial products like stocks, listed investment funds, bonds, debentures, etc., are not considered alternative assets.

All alternative assets have in common that they don't have much to do with the stock market. As a result, these investments have good returns when the market goes up and down.

This means that investors can have a more diversified portfolio of assets if they stay out of the market. Also, investing in alternatives gives you access to a new way to make money that you couldn't get with traditional investments.

Then, what do we talk about? Private equity, real estate, cryptocurrencies, and infrastructure are the most popular investments. However, you can also invest in raw materials, private debt, and other assets like art, jewelry, or cars.

But it's important to remember that, like any investment, it's not a good idea for everyone because it's not easy to sell. This could be a risk for some people. Since they are less liquid, the investor must look at their finances and assets to determine how much of their money they can put into this asset. They should always think long-term to see if the money they want to put into a private equity fund will be needed soon.

All this can be hectic for you. That's why letting an alternative professional manager handle it for you is advisable. Talking of alternative asset managers, one you should try is from Austin, Texas. E360 power gives each investor a personalized service to what suit you best. In addition, our relationship managers have a lot of experience that you can use to reach goals that will give you sound financial returns if you invest responsibly.