While many advisers and investors question where solid returns can be found, others have turned to exotic alternatives in search of outsized performance, and are often handsomely rewarded for taking the leap.
Exotic alts — including collectibles such as art, coins, watches, trading cards and comic books; vintage wine and Scotch; and automobiles — have outperformed the S&P 500 by wide margins during the past five and 10 years.
Other exotic alts include financial contracts, life settlements, royalties, tax liens and leases, among many other products. Litigation finance (another exotic alt where investors provide capital for one party in a contract dispute to sue another) has produced returns averaging 25 percent to 50 percent per annum in recent years, according to Kevin Mirabile, author of Exotic Alternative Investments — Stand Alone Characteristics, Unique Risks and Portfolio Effects and a professor of finance at Fordham University.
Mirabile,