It’s no secret that alternative assets - a catchall phrase for anything outside the major stock, bond and cash markets - are becoming increasingly popular. Historically low interest rates and the enduring effects of stimulus programmes are making both bond prices and global equity markets look expensive, and particularly vulnerable in the context of inflation.
Alternatives are attractive because they have tended to have a low correlation with public equities and bonds, and exposure to real assets should benefit from a rise in global price levels. The difficulty for private investors has been access, as by their nature most alternatives have poor liquidity. But a growing number of specialist investment trusts in the private equity, infrastructure and real estate sectors are a good way for you to invest.
There are consultations on pension policy underway that seem to vindicate the case for alternatives. In the March budget, Chancellor Rishi Sunak suggested emerging sectors such as green infrastructure and innovative British companies as a good fit for the long-term horizons of defined contribution (DC) pension schemes, as spelled out in preparations for the Long-Term Asset Fund, designed to encourage more investment in alternatives.