Joining forces: Alternative assets in a traditional portfolio
By Client Solutions & Research at Sanlam Investments
By understanding alternative asset price formations and their relationships to traditional assets, investors are able to better understand the value of including each alternative asset that is available to them into a portfolio. Here we specifically consider the benefits of including hedge funds, real assets or African private credit into a traditional portfolio.
We find that for growth-focused portfolios, higher returns are delivered at lower volatility over longer investment horizons (periods of more than 10 years). Whereas for income-focused portfolios, there are significant benefits in the form of improved yields, through the inclusion of vehicles such as unlisted credit. But the fact remains, for most complementary portfolios containing a mix of growth, income and protection assets, alternative assets provide additions that enhance returns, reduce portfolio volatility and bring greater diversification to the portfolio.