The alternative assets industry is a segment of the broader investment landscape. Rather than focusing on traditional options like stocks and bonds, the alternative investments industry covers diverse assets like real estate or cryptocurrencies. These unconventional assets can potentially offer higher returns, and they also come with risks and complexities. It’s important for potential investors to understand the specialized nature of this industry.
At i2 Advisors, we’ve put together this brief educational guide to help you understand alternative investments so you can make informed decisions with your investing. As always, it’s important to consult your financial advisor for advice whenever you are considering any investment moves to assess whether such investments are suitable for you based on your investment goals, risk tolerance, and financial situation. Let’s get started.
What Are Alternative Assets Industry Examples?
The alternative assets industry encompasses a variety of unconventional investments, from real estate, private equity, hedge funds, commodities, and even newer options like cryptocurrency.
- Real estate investments involve properties like commercial buildings and residential homes.
- Private equity refers to ownership in non-public companies.
- Hedge funds employ non-traditional investing strategies to potentially yield high returns.
- Commodities involve trading in raw materials like gold and oil, or trading futures for crops or other resources.
- Cryptocurrencies like Bitcoin offer digital investment options.
The alternative assets industry caters to investors seeking portfolio diversification, a strategy many use seeking to weather economic instability.
How Big Is the Alternative Assets Industry?
According to the research and analytics firm Preqin, the global market for alternative investments will reach $18.3 trillion in 2027, up from $9.3 trillion and almost twice its size at the start of 2022. While the size of this industry can fluctuate due to market conditions, economic trends, and investor preferences, in general, it seems to be thriving and growing.
Which Alternative Asset Has the Largest Market?
According to Forbes, real estate assets, private equity, and private debt have the largest markets and will continue to grow, reaching $21.1 trillion by 2025, accounting for 15% of global assets under management. Preqin notes that alternative asset classes that have historically performed well in volatile markets are infrastructure, natural resources, private debt, venture capital, and global macro hedge funds.
What Is an Alternative Investment Company?
Alternative investment companies are a type of financial firm that specializes in managing and offering investment opportunities in alternative assets. They gather funds from investors and use their expertise to invest in the unconventional assets discussed earlier on behalf of their clients. Some alternative investment companies may specialize in just one type of asset, like commodities or cryptocurrency, while others offer a broad range of opportunities.
Who Is an Alternative Asset Manager?
An alternative asset manager is a professional who oversees and makes investment decisions related to alternative assets on behalf of investors. Their role includes sourcing, analyzing, and managing all of the unconventional assets that their clients select. In order to be successful, an alternative asset manager must have a deep understanding of the specific industries and markets they operate in, as well as a strategic approach to investment management. Engaging an alternative asset manager provides investors with expert insights and tailored strategies, ensuring they maximize returns and navigate the complexities of alternative investments effectively.
What Is an Alternative Investment That Is Often Overlooked?
One unique and specialized alternative investment strategy is investing in life settlements. A life settlement is a financial transaction in which a person sells their life insurance policy to a third party, working with a life settlement broker, for a lump sum payment. The broker then finds investors to purchase the policy, who becomes the new beneficiary and assumes responsibility for paying future premiums. The seller receives a one-time payment that is greater than the policy’s cash surrender value but less than the death benefit.
Unlike other alternative assets, life settlements have a reliable return on investment, as they are based on the policy’s death benefit. For investors looking to diversify their portfolios, life settlements can potentially be a lower risk way to do so. However, life settlement investments are not without risk. You should carefully research the risks surrounding life settlements and discuss with a professional who is well versed in this field to determine if life settlements are a viable option for you. Additionally, it’s important to consult with your financial advisor before making important investment decisions.
Become a Part of the Alternative Investment Industry With Life Settlement Advisors Today
If you’re interested in dipping your toes into the alternative investments industry and want to start with life settlements, consider Life Settlement Advisors as your guide. With decades of experience navigating this particular alternative asset market, we will help you understand the ins-and-outs and determine if life settlements are right for you. We’re standing by at i2 Advisors, so reach out today to learn more about this unique asset class.
THIS MATERIAL IS FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY. OTHER THAN LIFE SETTLEMENTS, I2 ADVISORS DOES NOT PROVIDE THE SERVICES DESCRIBED IN THESE EDUCATIONAL MATERIALS NOR DOES IT RECOMMEND ANYONE TO INVEST IN THE ASSETS DESCRIBED THEREIN. ALL INVESTMENTS CARRY RISK AND INDIVIDUALS SHOULD CONSULT WITH THEIR FINANCIAL PROFESSIONALS BEFORE UNDERTAKING ANY TYPE OF INVESTMENT. THIS INFORMATION DOES NOT CONSTITUTE INVESTMENT ADVICE AND SHOULD NOT BE CONSTRUED AS A SOLICITATION OR OFFERING OF ANY INVESTMENTS DESCRIBED THEREIN.