An introduction
Whether you are looking to diversify your existing portfolio, boost your income or maximise long-term capital growth, investment companies can provide the best way to access alternative asset classes as part of a long-term balanced portfolio.
This guide looks at some of the main types of alternative assets, and explains the key benefits and risks.
When people first begin to save, they normally start with cash and deposit type investments. Once they have built up a ‘rainy day’ fund, and can afford to take on more risk over the long term, they might move into equity investment, perhaps starting with a general equity fund. These funds normally invest in a wide range of shares and securities which are traded on stock markets and so invest in the largest and most well-known public companies, government stocks etc. The term ‘alternative’ is used to cover many other types of investments that are not traded on stock markets. These might include the shares in private companies, physical property or infrastructure projects.
In this guide, we will be looking at some of the most popular alternative assets, and why investment companies are particularly suited to accessing them. We will also consider the benefits that they can bring to your portfolio, and the risks involved.
Whatever asset class you are considering, you should bear in mind that your money is exposed to risk. You should not invest in these investment companies if you need a guaranteed income or if you cannot afford to lose your capital.
If you are not sure whether, or which, investment companies are suitable for you, you should consider taking independent financial advice.
Alternatives offer opportunities beyond public stock markets
New to investment companies? Read ‘A guide to getting started’ to learn the basics.