alternatives

The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.

Bringing together our insiders community to share perspectives, debate strategies, and refine their approach to portfolio construction is always an enlightening exercise.

Private credit investing has seen exponential growth in recent years, fueled by structural shifts in financial markets and a growing demand for flexible, non-bank lending solutions. Private credit is no longer a niche – it’s a major force in the market.

As the investment landscape evolves, the role of alternative investments remains a topic of debate. Some argue that traditional asset classes – shares and fixed income – are sufficient to build a well-diversified portfolio, while others see alternatives as essential for achieving uncorrelated returns and risk-adjusted growth. Here, we explore both perspectives.

Australian investors have poured money into private equity (PE) investments in recent years, but asset valuations are prone to the same combination of multiple and margin compression, and interest-rate pressure, that affects the listed markets. A big chunk of the pile of PE value is potentially facing high fire risk.

Atchison’s framework for the implementation and effective management of alternative investments involves, before anything else, the careful assessment and categorisation of asset liquidity levels.

The democratisation of alternative assets into retail markets is nothing new, but the fact that it is accelerating brings into focus the risks that are now being acknowledged by investment management teams.

High returns help, but what’s more important is trust, accountability, and making sure that the remuneration structures aren’t “really cheeky”.

The alternatives sector is unique in that it’s largely defined by what it’s not. Accordingly, how you fit alternatives within your existing asset class structure will depend on relativity, and how the investments interact with the other asset classes according to Atchison’s Kev Toohey.

The benefits of alternative investments are clear, but rapid growth in the product set has made the optimal use of alternatives in portfolios unclear. As markets reach all-time highs, it may be time to re-think how we treat the asset class.