Alternative investments make it possible to generate positive returns even in times of falling equity markets and rising capital market interest rates. Alternative investments do not, or only slightly, correlate with the classic investment forms of bonds or shares, and therefore diversify, stabilise and smooth the yield of your portfolio. Ice cream together with umbrellas, sun cream together with rubber boots, can protect your investment against losses!
How important are diversification and correlation for your portfolio?
To get a clear image of just how important diversification and correlation are for your portfolio, please imagine the following: You are a street vendor. You sell umbrellas in Salzburg. A lucrative business. You have a high level of demand because it rains frequently in Salzburg. There is precipitation throughout the whole year. The margin on umbrellas is fantastic. The customers rarely ask the price. After all, it’s raining, they’re getting wet, and you have the solution ready at hand. After two successful years, you want to increase your turnover and profit. Thanks to the excellent results, you are in a position to purchase additional high-margin items. So you expand – diversify – your range with the addition of rubber boots, rain jackets, gloves etc. You are looking forward to your third year of business and expect high profits. In your mind’s eye, you can already picture a graph with the columns shooting off the chart. At the end of the business year, reality catches up with you... your storage facility is full. You suffer a veritable loss.
Salzburg reports a new record number of visitors. So the number of tourists is not to blame. You made sure to stock absolutely everything someone could wish to purchase on a rainy day. You diversified heavily. And yet you still lost a hefty sum of money.
But you only offer solutions for one event: RAIN. It was a warm spring, a hot midsummer and a dry and warm late summer. Lots of sun, pleasant temperatures and very little rain. This year, it would have been better if, in addition to the umbrellas, you had offered products that are in demand during sunny weather: ice cream, sun cream, sunglasses, baseball hats etc. Products, that is, that have little or no connection – correlation – to the event “RAIN”. This is diversification with low correlation. And makes profit much more probable. It doesn’t necessarily increase it, but it makes it much more likely. And prevents major losses.
Both of these things – diversification and correlation – are not only important for the success of a street vendor in Salzburg. Both properties are also decisive for the lasting success of your financial investment.
In the complex area of alternative investments, we have years of extensive experience. This enables us to reduce the complexity for you and provide you with revenue opportunities.In the complex area of alternative investments, we have years of extensive experience. This enables us to reduce the complexity for you and provide you with revenue opportunities.
Private equity has proven to be a reliable and profitable addition to portfolios. In this asset class, the choice of fund manager is a very important factor for success. We have access to the most talented and successful fund managers in the world.
We select our managers on the basis of a tried and tested due diligence process. Because we know: It is not the market that determines the return – the capabilities of the manager are decisive for investment success.
Numerous alternative investment possibilities have cropped up in the last few years. These include private equity, i.e. participations in companies that are not listed on a stock exchange.
• Private equity
• Gold and other metals
• Real estate
• Hedge funds
• Other forms of investment such as ships, forests, power plants...