UBS non-traditional investments
Most private investors stick exclusively to traditional investments, such as equities and bonds. By contrast, professional investors are increasingly combining traditional with non-traditional investments. This is because non-traditional investments offer attractive returns and help to diversify the sources of risk in the portfolio, thus stabilizing its returns.
Non-traditional Asset Classes can have a positive influence on your portfolio.
Hedge funds, commodities, real estate and private equity allow to obtain attractive returns. Additionally they have a low correlation with bonds and equities and therefore can stabilize portfolio performance.
The main non-traditional investment classes are hedge funds, commodities, real estate and private equity. They all have their distinct risk and return characteristics.
Four Alternative Investments
Hedge funds enjoy considerable freedom in their choice of investment techniques and instruments. They aim for absolute, positive returns, irrespective of developments on the financial markets. A hedge fund's performance largely depends on its manager's skills, making careful selection and diversification critical.
Commodities include energy, precious metals, industrial metals and agricultural produce. The performance of different commodities and commodity classes often varies widely, but they usually benefit from global economic growth. They often turn in a good performance when the equity markets are stagnating or in decline.
Real estate includes five investment sectors with differing risk/return profiles: residential, retail, industrial and office property and hotels. Real estate helps stabilize a portfolio by generating regular returns and offers protection against inflation.
Private equity refers to investments in unlisted companies. Most investments are made in the start-up or initial growth phase with the aim of making capital gains by selling the company in the medium term. Private equity investments are very illiquid but are one of the most attractive asset classes in terms of returns.
Direct investments in these instruments are usually reserved for large-scale investors and professional market participants. However, as one of the leading providers, UBS has made these asset classes available for private investors as well, mostly in the form of investment funds and certificates. Why not speak to your client advisor about how best to integrate non-traditional investments into your personal portfolio?
For private investors the new UBS A&Q Alternative Solution Index Certificate present an easy solution for investing simultaneously into all four alternative Asset Classes.