Global Investing/ Alternative Investing

NOV 28, 2011

ALTERNATIVE INVESTMENTS.

Our Financial Adviser Duncan Philp regularly writes articles for the Courier and here is one published in November 2011

The uncertainty and debt crisis engulfing global markets has resulted in some clients asking about alternatives to investing in equities.

It is my belief that a well structured portfolio geared up to your specific risk profile should cope well in a volatile environment, however there are alternatives to investors who wish to look elsewhere for potential investment returns.

An alternative investment can probably be described as “ An investment product other than the traditional investment of Stocks, Bonds and Cash”.

The term alternative investment is not a definitive description and can include a wide variety of other assets such as Art, Fine Wine, Antiques, Coins and Stamps. It can also include financial assets such as Commodities, Private Equity, Hedge Funds, Structured Products, Enterprise Investment Schemes and Venture Capital Trusts.

The period from 1^st August to 10^th August saw global markets suffer considerable losses over this short period of time.

To give an example of how funds performed compared to markets during this period I would like to highlight two funds-: JPM Cautious Total Return +3.44% (Cautious Managed Sector)

Jupiter Absolute Return +3.3% (Absolute Return Sector) this is against the FTSE All Share which showed a loss of -12.91 over the same period.

This is only one example of how an investment fund can protect you from market conditions however even the Absolute Return Sector is itself quite diversified in performance where the best performing fund over a 12 month period returned a creditable +22% to the worst performing fund returning -8%.

Compare this to some banks who are advising clients to invest in FTSE 100 Tracker Funds, in this case over the same 12 month period the FTSE was down -14%.

You can also compare this with commodities whereby the price of Gold over a twelve month period showed a rise of over 40% and Silver showing a rise of over 130% over the same period.

Alternative investments are as you have now noticed can be extremely diversified in what they are investing in and the need for advice is paramount.

You should speak to a professional IFA who is actively involved in investments to guide you through the maze.

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