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Your Guide to Alternative Investing

Looking for alternative assets to add to your portfolio? Uncorrelated investments provide diversification and help boost returns and smooth losses

Emma Wall 12 December, 2016 | 10:15AM

Investing 101 suggests that a diversified portfolio can be built with three blocks; equities, bonds and cash. In certain market conditions stock prices rise, the teaching suggests, and bond prices fall, while in a different part of the cycle the reverse is true; uncorrelated assets provide diversification and help boost returns and smooth losses.

But monetary policy has distorted correlations, in times of market stress both bonds and equities fall together – take the market crash of summer 2015 for example, initially triggered by the Chinese stock market tumbling, but which spread across asset classes and geographies.

Multi-asset fund managers are increasingly looking to alternative assets to provide protection in these circumstances – investments removed from the headwinds and tailwinds that move global markets. Hedge fund managers have long employed a broader spectrum of assets and tools to meet their return targets and now these processes are entering the mainstream.

Although some assets are too niche for the private investor – such as catastrophe reinsurance, asset-backed securities or aeroplane leasing – but other alternative assets can provide welcome diversification to plain vanilla portfolios. Read on for Morningstar’s Guide to Alternative Investing to find out more.

Monday: Property

Your property as your pension, global diversification and Brexit

Investing in Property: What You Need to Know

3 Funds to Invest in Property

Henderson: Falling Pound Has Attracted Property Investors

Is Your Home a Risky Investment?

Tuesday: Gold, Energy and Commodities

Safe haven precious metals, the oil price, agriculture and renewable energy

Brookes: Buy Commodities and Emerging Markets Now

How to Invest in Gold

Commodities Will Continue to Rally in 2017

Gold and Commodities Top Performing Trusts of 2016

Wednesday: Infrastructure

Backed by Donald Trump and Philip Hammond are their further gains to be made?

Investing in Infrastructure ETFs

Infrastructure Trusts for Income

Trump, Infrastructure and Sustainable Investing

Thursday: VCTs and EISs

Specialist funds for small company exposure

What is a VCT?

Hargreaves: 3 Top VCT Picks

Boost Your Returns with Tax Free Investments

Friday: Multi-asset Funds

The best managers deploying alternative assets so you don’t have to

Fidelity's 3 Fund Picks for Value Investors

3 Top Rated Multi-asset Funds

3 Top Rated Absolute Return Funds

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author Emma Wall

Emma Wall  is Senior Editor for Morningstar.co.uk