An alternative path: Why alternative assets should be a staple in investor portfolios
It was a savage 2022 for the stock market. The S&P 500 Index plunged 19.4 percent. The Hang Seng Index in Hong Kong lost 15.5 percent. The Stoxx Europe 600 Index dropped 12.8 percent. Property capital values suffered, too, and are generally a lagging indicator to the lead that stocks take.
But what are the alternatives when stocks are suffering? Investors in alternative real estate subsectors are no longer onto a secret. But they remain a select breed. Alternative assets generally made it into the black even during a bleak year.
“Alternatives can provide an essential ‘aid’ that portfolios require: alpha, inflation protection and dislocation opportunities,” says Gary Leung, head of alternatives for Asia Pacific clients at J.P. Morgan Asset Management.
While the nature of alpha outperformance and inflation protection are clear, the dislocation opportunities require a little more explanation. When capital markets freeze up due to poor equity performance