Tracking trends in the alternative investments sector

As the global economic landscape evolves and traditional asset classes face uncertainties, the interest in alternative investments is growing among individual investors. With a desire to explore value outside of conventional avenues, many are turning to alternative investment options for diversification and potential high returns. In a recent discussion on CNBC Africa, Abdu-Rahman Abrahams, Co-head at Hybrid Equity, and Jonty Sacks, Partner at Jaltech, shed light on the changing trends and opportunities in the alternative investments sector. The alternative investment market has been gaining traction, with a significant number of individual investors venturing into this space. According to research conducted by Jonty Sacks, over 65% of respondents have already invested in alternatives, pointing to a growing interest in this asset class. The accessibility of alternative funds managed by companies like Old Mutual has made it easier for investors to explore these options. Looking ahead, more than 75% of respondents expressed their intention to further invest in alternatives in the next 24 months. This shift towards alternative investments can be attributed to the challenging global economic and political environments, prompting investors to seek diversification and stability outside of traditional markets. One of the key observations from the research was that investors typically allocate between 1 and 10% of their wealth to alternative investments. While the sector presents opportunities for growth and innovation, it also comes with risks. Factors such as age and risk tolerance play a crucial role in determining the suitability of alternative investments for individuals. Younger investors are often more willing to take risks, while older investors may gravitate towards more stable asset classes. The discussion also touched on specific areas within the alternative investments space, with a spotlight on renewable energy and technology-driven businesses. While cryptocurrencies have garnered global attention, Abdu-Rahman Abrahams emphasized a focus on traditional businesses with strong cash flows. He highlighted the growth potential in sectors like energy, infrastructure, and internet access, positioning them as promising investment areas for the future. In the realm of infrastructure investments, Abdu-Rahman shared insights into the performance of alternative asset classes over the past 15 to 17 years. Contrary to common perceptions, he noted that returns from infrastructure investments have been significant and have outperformed traditional asset classes. By investing in sectors like empowerment financing and supporting smaller developers, investors have seen favorable returns while contributing to economic growth. Jonty Sacks echoed the sentiment of stability in renewable energy investments, emphasizing the long-term benefits of power purchase agreements and predictable returns. While alternatives may not always offer high returns, they provide a level of stability and security that appeals to investors seeking consistent performance over time. When it comes to assessing risk in alternative investments, the experts clarified that 'alternative' simply refers to investments outside of equities, property, and bonds. It doesn't necessarily equate to higher risk; rather, it offers a way to diversify portfolios and potentially reduce overall risk exposure. By carefully diversifying within alternative asset classes, investors can balance risk and return, tailoring their investment strategy to their individual goals and risk tolerance. Overall, the conversation highlighted the evolving landscape of alternative investments and the diverse opportunities available to investors. As the market continues to grow and adapt to changing trends, individuals are encouraged to explore the potential benefits of alternative asset classes while being mindful of their risk appetite and investment objectives. With a mix of traditional and innovative investment strategies, investors can navigate the alternative investments sector with confidence and strategic intent.