Alternative investment strategies include
all investment strategies beyond traditional
bond and equity investments. They are
generally referred to as "skill
based" strategies, where investment
returns are a function of particular skills
of the individual trading manager. This
contrasts to investments where returns are
mostly generated by broad market moves. This
has various implications - most notably,
such investments do not necessarily lose
money when there are broad stock market
declines. A further apt description places
alternative investment funds such as hedge
funds as exploiting the inefficiencies in
traditional markets - with these increasing;
this bodes well for such strategies
continuing to perform exceptionally well.
The
benefits:
Enhanced and sustainable
profit potential
Mitigation of over-all
portfolio risk
Global market exposure
Absolute returns
Enhanced liquidity
Potential to profit in
both rising and falling markets
Further diversification
from traditional investments
Disadvantages
The primary disadvantage of
investing in alternative investment
strategies using alternative investment fund
managers are:
Difficulty in understanding the
managers propriety trading strategy
Difficulty in monitoring performance
against market conditions at any given
instant
To overcome these disadvantages, due
diligence on any selected fund manager is an
important criterion before incorporating
them into any portfolio. Such a due
diligence checklist should include:
Manager reputation
Manager's own investment in fund
Staff
Risk management
Transparency
Track record
Length of track record
Money under management
Reporting practices
Valuation methods
Target return
Risk levels
Holding periods
Investment of proprietary capital
Given these constraints, a number of
alternative strategy fund managers have been
identified and short-listed as appropriate
for individual client investment.
Diversification
Diversifying
your portfolio is more important now than it
has been in several years. If the past year
has made anything clear, it is that no one
type of investment is in favor forever.
Keeping your portfolio diversified across
various sizes and asset classes of stocks,
bonds and cash helps insulate you from a
market downturn in any one class, and
minimizes your overall risk.
Financial
Planning Is Now More Important Than Ever
Financial planning is a process that helps
you understand your financial situation,
formulate your future goals and develop
strategies to help you reach those goals. A
thorough, long-term financial plan can give
you peace of mind — in good times and in
bad. We suggest that you revisit your plan
at least once a year to see how you’re
doing and identify what adjustments may need
to be taken. Now might be a good time to
revisit your plan with a financial advisor.
Be proactive, if your advisor has not
called, give him or her a call and make sure
that your plan is working for you.
Get
Professional Advice
You
don’t have to be alone in managing your
investments. Your financial advisor can
offer encouragement during this time of
uncertainty by ensuring your investments are
adequately positioned for the short and long
term.
Contact Information
If you would like to obtain more information or
to arrange a discreet, free and without obligation
consultation, please feel free to make contact using
the details below to find out about local
representation in your area.
